Cogeco Inc — Management Reports 2023

Jan 13, 2023

MANAGEMENT'S DISCUSSION AND ANALYSIS ("MD&A")

Three-month period ended November 30, 2022

1. FORWARD-LOOKING STATEMENTS

Certain statements contained 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 Inc.'s ("Cogeco" or the "Corporation") 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. Particularly, statements regarding the Corporation's financial guidelines, future operating results and economic performance, objectives and strategies are forward-looking statements. These statements are based on certain factors and assumptions including expected growth, results of operations, purchase price allocation, tax rates, weighted average cost of capital, performance and business prospects and opportunities, which Cogeco believes are reasonable as of the current date. Refer in particular to the "Corporate objectives and strategies" section of the Corporation's 2022 annual MD&A and of the current MD&A, the "Fiscal 2023 financial guidelines" section of the Corporation's 2022 annual MD&A and the "Fiscal 2023 revised financial guidelines of the current MD&A for a discussion of certain key economic, market and operational assumptions we have made in preparing forward-looking statements. While management considers these assumptions to be reasonable based on information currently available to the Corporation, they may prove to be incorrect. Forward-looking information is also subject to certain factors, including risks and uncertainties that could cause actual results to differ materially from what Cogeco currently expects. These factors include risks such as competitive risks (changing competitive ecosystem, disruptive competitive strategies adopted by our competitors), business risks (including potential disruption to our supply chain caused by economic and geopolitical instability and other contributing factors, increasing transportation lead times, scarcity and shortage of input materials and key telecommunication equipment and competition for limited resources), regulatory risks, technology risks (including cybersecurity), financial risks (including variations in currency and interest rates), economic conditions (including elevated inflation reaching historical highs pressuring revenue, due to reduced consumer spending, and increasing costs), human-caused and natural threats to our network (including increased frequency of extreme weather events with the potential to disrupt operations), infrastructure and systems, community acceptance risks, ethical behavior risks, ownership risks, litigation risks and public health and safety, many of which are beyond the Corporation's control. Moreover, the Corporation's radio operations are significantly exposed to advertising budgets from the retail industry, which can fluctuate due to changing economic conditions. For more exhaustive information on these risks and uncertainties, the reader should refer to the "Uncertainties and main risk factors" sections of the Corporation's 2022 annual MD&A and of the current MD&A. These factors are not intended to represent a complete list of the factors that could affect Cogeco and future events and results may vary significantly from what management currently foresees. The reader should not place undue importance on forward-looking information contained in this MD&A which represent Cogeco's expectations as of the date of this MD&A (or as of the date they are otherwise stated to be made) and are subject to change after such date. While management may elect to do so, the Corporation is under no obligation (and expressly disclaims any such obligation) and does not undertake to update or alter this information at any particular time, whether as a result of new information, future events or otherwise, except as 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 for the three-month period ended November 30, 2022 prepared in accordance with International Financial Reporting Standards ("IFRS") and the Corporation's 2022 Annual Report.

In preparing this MD&A, the Corporation has taken into account information available up to January 12, 2023, the date of this MD&A, unless otherwise indicated. Additional information relating to the Corporation, including its 2022 Annual Report and Annual Information Form, is available on the SEDAR website at www.sedar.com or on the Corporation's website at corpo.cogeco.com.

2. OVERVIEW OF THE BUSINESS

Cogeco is a diversified holding corporation which operates in the telecommunications and media sectors. The Corporation's results are reported in two operating segments: Canadian telecommunications and American telecommunications. The reporting structure reflects how the Corporation manages its business activities, makes decisions about resources to be allocated to the segments and assesses their performance.

2.1 CORPORATE OBJECTIVES AND STRATEGIES

Strategy for continued growth

Our growth and value creation activities are focused on growing the business organically, making acquisitions and continuously innovating while returning capital to shareholders and maintaining a prudent level of financial leverage. In order to do so, we leverage our unique North American broadband platform, reliable and resilient networks, innovative products and services, relationships with local communities and customer-centric mindset.

Organic

We aim to differentiate ourselves from the competition and deliver superior quality service by providing a distinctive customer experience. We also seek to be number one in our markets and grow our footprint by extending our network in adjacent areas.

Acquisitions

As a consolidator of targeted regional cable operators, we continue to seek attractive strategic acquisitions in both the U.S. and Canada, where we add value through our operational expertise.

Innovation

We continuously enhance our product and customer service offerings to benefit our customers, fueled in large part by the acceleration of digital initiatives. Also, we continue to forge ahead with our plan to enter the Canadian mobile services market through a capital efficient model.

For details on the Corporation's key areas of focus of the strategic plan for fiscal 2023, please refer to the "Corporate objectives and strategies" section of the Corporation's 2022 annual MD&A, available at www.sedar.com and on the Corporation's website at corpo.cogeco.com.

2.2 BUSINESS DEVELOPMENTS

Update on Cogeco's plan to offer mobile services in Canada

On April 15, 2021, the CRTC released a decision related to mobile virtual network operator ("MVNO") regulation, requiring Canada's incumbent wireless providers to provide access to their networks to regional wireless carriers in Tier 4 spectrum licence areas where they own spectrum. On October 19, 2022, the CRTC released a follow-up decision establishing the terms and conditions of the service that will support the deployment of MVNOs, and directed incumbent carriers to make changes to the wholesale MVNO access terms and conditions in the tariffs they had proposed. The CRTC also clarified that, in order to be eligible for the MVNO access service, regional carriers must not only satisfy the previously established criteria of owning spectrum at the Tier 4 level or higher in a given Tier 4 licence area, but must also be actively offering mobile wireless services commercially to retail customers somewhere in Canada. While the Corporation owns spectrum covering 91% of its Canadian operating footprint, it does not currently offer mobile wireless services commercially to retail customers.

The Corporation remains interested, as part of its growth strategy, in offering mobile services on its operating footprint in order to offer a wider range of telecommunications services. The approval by the CRTC of reasonable wholesale MVNO access tariffs, as well as the Corporation securing satisfactory wholesale rates for access to incumbent wireless networks, will be critical as the Corporation prepares its next steps.

For further details, please refer to the "Uncertainties and main risk factors" section of the 2022 annual MD&A.

Launch of Breezeline Stream TV in Ohio

In December 2022, Breezeline introduced Breezeline Stream TV in Ohio to its new video customers, which will be offered to all of its existing video customers in this state in early 2023. Breezeline Stream TV is a new cloud-based service that seamlessly integrates live TV, digital video recording, On Demand and streaming apps for viewing on devices inside and outside the home.

High-speed Internet network expansion in Canada and the United States

As part of its plan to extend its high-speed Internet coverage and to provide Internet access in underserved and unserved areas, the Corporation continued, during the first quarter of fiscal 2023, its acceleration of high-speed Internet network expansion projects in both Canada and the United States, a portion of which is done in collaboration with governments. Homes passed added during the quarter were about 20,000 and 17,000 in Canada and the United States, respectively.

Intention to renew Cogeco's normal course issuer bid

On January 12, 2023, the Board of Directors of Cogeco approved the renewal of Cogeco's normal course issuer bid ("NCIB") to repurchase for cancellation up to 325,000 subordinate voting shares, subject to the approval of the Toronto Stock Exchange. The current NCIB expires on January 17, 2023.

Amendment of Cogeco Communications' normal course issuer bid

On November 24, 2022, Cogeco Communications received the approval of the Toronto Stock Exchange to amend its NCIB in order to increase the maximum number of its subordinate voting shares that may be repurchased for cancellation from 1,500,000 to 1,960,905, representing 10% of the 19,609,056 subordinate voting shares that constituted the public float of the Corporation's issued and outstanding subordinate voting shares as of the reference date of April 22, 2022. No other terms of the NCIB have been amended. Cogeco Communications purchased and cancelled 979,970 shares from the beginning of the NCIB program starting on May 4, 2022 to November 30, 2022, compared to 768,700 shares during the same period in the prior year under the previous NCIB program.

2.3 OPERATING ENVIRONMENT

The current global economic and political instability has resulted in rising inflation and interest rates. While we are proactively working at minimizing their impact on the Corporation, we expect the combination of those elements to continue to put pressure on revenue, as some customers seek ways to reduce their monthly spending, and on the costs to deliver our services. At the same time, and partially as a reaction to a more challenging market, some telecommunications providers have adopted more aggressive strategies and price points in order to generate sales activity.

While the Corporation experienced sustained demand for its residential high-speed Internet product in the context of the COVID-19 pandemic restrictions, a softening of the market is being observed with the re-opening of the economy in the recent quarters and a return to the workplace. While we remain cautious in our management of the situation, our priority remains on ensuring the well-being of our employees, customers and business partners. Although we have conducted our operations normally during recent quarters, we will remain vigilant should the situation change in the future.

Furthermore, our radio operations have been impacted by a portion of their customer base, such as the travel and automobile industries, reducing their advertising budgets in the context of a challenging economic environment and supply chain disruptions. In order to mitigate the impact on its operations, Cogeco Media continues to manage its operating expenses tightly, as it did since the beginning of the pandemic, while maintaining quality programming.

The Corporation's results discussed herein may not be indicative of future operational trends and financial performance. Please refer to the "Forward-looking statements" section.

2.4 KEY PERFORMANCE INDICATORS

The Corporation measures its financial performance, with regard to its corporate objectives, by monitoring revenue, adjusted EBITDA (1), net capital expenditures (1) and free cash flow (1) on a constant currency basis (1). The Corporation also measures net capital expenditures and free cash flow excluding network expansion projects (1) as it provides a common basis for comparing the net capital expenditures to historical net capital expenditures prior to the acceleration of the network expansion projects and for assessing the impact of the network expansion projects on the net capital expenditures and free cash flow. Excluding the impact of net capital expenditures in connection with network expansion projects does not imply it is non-recurring.

OVERVIEW

During the first quarter of fiscal 2023, revenue growth on a constant currency basis compared to the prior year was driven by the Canadian telecommunications segment, while the American telecommunications segment was stable. Adjusted EBITDA growth on a constant currency basis was also driven by the Canadian telecommunications segment, while the American telecommunications segment declined, as expected, due to unusually low operating expenses last year in Ohio while the assets were still operating under the previous owner's brand.

During the first quarter of fiscal 2023, both the Canadian and American telecommunications segments continued their network expansion activities, connecting more homes and businesses to their fibre-to-the-home networks. Homes passed added during the quarter were about 20,000 and 17,000 in Canada and the United States, respectively. Acceleration of network expansion activities during the quarter led to increased net capital expenditures and higher than usual capital intensity, while reducing free cash flow, as expected. These fibre-to-thehome network expansion projects will increase the Corporation's footprint in the provinces of Québec and Ontario and in several areas adjacent to Breezeline's network in the United States.

For the remainder of fiscal 2023, the Corporation expects lower growth rates of revenue and adjusted EBITDA, and lower net capital expenditures than under the previous financial guidelines. Free cash flow projections remain the same as previously disclosed. Refer to the "Fiscal 2023 revised financial guidelines" section for further details.

For further details on the Corporation's operating results for the first quarter of fiscal 2023, please refer to the "Consolidated operating and financial results", the "Segmented operating and financial results" and the "Cash flows analysis" sections.

(1) Adjusted EBITDA and net capital expenditures are total of segments measures. Constant currency basis, net capital expenditures, excluding network expansion projects, free cash flow and free cash flow, excluding network expansion projects, are non-IFRS financial measures. Change in constant currency is a non-IFRS ratio. These 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 information on these financial measures, please consult the "Non-IFRS and other financial measures" section.

3. CONSOLIDATED OPERATING AND FINANCIAL RESULTS

3.1 OPERATING RESULTS

					Three months ended November 30,
						Change
	2022 (1)	Foreignexchangeimpact	2022in constantcurrency (2)	2021	Actual	Inconstantcurrency
(In thousands of Canadian dollars, except percentages)	$	$	$	$	%	%
Revenue	789,690	(26,910)	762,780	745,258	6.0	2.4
Operating expenses	415,808	(15,435)	400,373	390,864	6.4	2.4
Adjusted EBITDA	373,882	(11,475)	362,407	354,394	5.5	2.3

(1) For fiscal 2023 first-quarter, the average foreign exchange rate used for translation was 1.3489 USD/CDN.

(2) Fiscal 2023 first-quarter in constant currency is translated at the average foreign exchange rate of fiscal 2022 first-quarter, which was 1.2559 USD/CDN.

REVENUE

				Three months ended November 30,
	2022	2021	Change	Change inconstantcurrency	Foreignexchangeimpact (1)
(In thousands of Canadian dollars, except percentages)	$	$	%	%	$
Canadian telecommunications	372,084	355,047	4.8	4.8	—
American telecommunications	390,216	363,494	7.4	(0.1)	(26,910)
Cogeco Communications	762,300	718,541	6.1	2.3	(26,910)
Other	27,390	26,717	2.5	2.5	—
Consolidated	789,690	745,258	6.0	2.4	(26,910)

(1) Foreign exchange impact is a non-IFRS financial measure. This indicated term does not have a standardized definition prescribed by IFRS and, therefore, may not be comparable to similar measures presented by other companies. For more information on this financial measure, including references to the specific sections within the MD&A, as applicable, for the reconciliations to the most directly comparable IFRS financial measures, please consult the "Non-IFRS and other financial measures" section.

Fiscal 2023 first-quarter revenue increased by 6.0% (2.4% in constant currency), mainly resulting from revenue growth in the Canadian telecommunications segment, driven by the cumulative effect of high-speed Internet service additions over the past years, a higher value product mix, rate increases, and higher revenue in the media activities, combined with stable revenue in the American telecommunications segment.

For further details on the Corporation's revenue, please refer to the "Segmented operating and financial results" section.

OPERATING EXPENSES

				Three months ended November 30,
	2022	2021	Change	Change inconstantcurrency	Foreignexchangeimpact
(In thousands of Canadian dollars, except percentages)	$	$	%	%	$
Canadian telecommunications	173,451	167,186	3.7	3.0	(1,168)
American telecommunications	207,710	187,730	10.6	3.0	(14,267)
Corporate and eliminations	8,516	8,758	(2.8)	(2.8)	—
Cogeco Communications	389,677	363,674	7.2	2.9	(15,435)
Other	26,131	27,190	(3.9)	(3.9)	—
Consolidated	415,808	390,864	6.4	2.4	(15,435)

Fiscal 2023 first-quarter operating expenses increased by 6.4% (2.4% in constant currency), resulting mainly from:

• higher operating expenses in the American telecommunications segment, mainly due to unusually low operating expenses last year in Ohio while the assets were still operating under the previous owner's brand; and

• higher operating expenses in the Canadian telecommunications segment, mainly resulting from higher marketing and advertising efforts and increased maintenance and information technology costs, partly offset by some efficiencies resulting from the organizational changes implemented in the fourth quarter of fiscal 2022; partly offset by

• lower operating expenses in the media activities.

For further details on the Corporation's operating expenses, please refer to the "Segmented operating and financial results" section.

ADJUSTED EBITDA

				Three months ended November 30,
	2022	2021	Change	Change inconstantcurrency	Foreignexchangeimpact
(In thousands of Canadian dollars, except percentages)	$	$	%	%	$
Canadian telecommunications	198,633	187,861	5.7	6.4	1,168
American telecommunications	182,506	175,764	3.8	(3.4)	(12,643)
Corporate and eliminations	(13,916)	(14,338)	2.9	2.9	—
Cogeco Communications	367,223	349,287	5.1	1.8	(11,475)
Other	6,659	5,107	30.4	30.4	—
Consolidated	373,882	354,394	5.5	2.3	(11,475)

Fiscal 2023 first-quarter adjusted EBITDA increased by 5.5% (2.3% in constant currency) as a result of:

• • an increase in the Canadian telecommunications segment, mainly attributable to the revenue growth; partly offset by
• • a decrease in constant currency in the American telecommunications segment, mainly resulting from unusually low spending in marketing and advertising and less staff last year in Ohio while the assets were still operating under the previous owner's brand, combined with stable revenue.

For further details on the Corporation's adjusted EBITDA, please refer to the "Segmented operating and financial results" section.

3.2 ACQUISITION, INTEGRATION, RESTRUCTURING AND OTHER COSTS

Fiscal 2023 first-quarter acquisition, integration, restructuring and other costs amounted to $2.7 million, mostly related to costs associated with the configuration and customization related to cloud computing arrangements. Fiscal 2022 first-quarter acquisition, integration, restructuring and other costs amounted to $18.6 million, mostly related to costs incurred in connection with the acquisition, completed on September 1, 2021, and integration of the Ohio broadband systems.

3.3 DEPRECIATION AND AMORTIZATION

	Three months ended November 30,
	2022	2021	Change
(In thousands of Canadian dollars, except percentages)	$	$	%
Depreciation of property, plant and equipment	142,181	138,182	2.9
Amortization of intangible assets	14,209	14,447	(1.6)
	156,390	152,629	2.5

Fiscal 2023 first-quarter depreciation and amortization expense increased by 2.5%, mainly due to the appreciation of the US dollar against the Canadian dollar compared to the same period of the prior year.

3.4 FINANCIAL EXPENSE

	Three months ended November 30,
	2022	2021	Change
(In thousands of Canadian dollars, except percentages)	$	$	%
Interest on long-term debt, excluding interest on lease liabilities	55,857	43,084	29.6
Interest on lease liabilities	646	449	43.9
Net foreign exchange loss	2,372	1,270	86.8
Amortization of deferred transaction costs related to the revolving facilities	182	203	(10.3)
Other	(1,530)	602	—
	57,527	45,608	26.1

Fiscal 2023 first-quarter financial expense increased by 26.1%, mainly attributable to:

• higher interest expense on the floating interest rate portion of the Senior Secured Term Loan B Facility, mainly resulting from the increase in interest rates; and
• the appreciation of the US dollar against the Canadian dollar compared to the same period of the prior year; partly offset by
• lower interest expense following the reimbursement of the $200 million Senior Secured Debentures Series 3 in February 2022.

3.5 INCOME TAXES

		Three months ended November 30,
	2022	2021	Change
(In thousands of Canadian dollars, except percentages)	$	$	%
Current	9,290	15,549	(40.3)
Deferred	24,190	2,834	—
Income taxes	33,480	18,383	82.1
Effective income tax rate	21.3 %	13.4 %	59.0

Overall, fiscal 2023 first-quarter income tax expense increased by 82.1%, mainly due to:

• last year's $11.9 million adjustment recognized following the Ohio broadband systems acquisition, which reduced the blended state income tax rate, enabling the Corporation to recognize a reduction of deferred tax liability in the first quarter of fiscal 2022 related to U.S. temporary tax differences; and
• the increase in profit before income taxes.

Current income taxes were lower in the first quarter of fiscal 2023 compared to the same period of the prior year mainly due to the higher tax benefits related to the U.S. subsidiaries and the variation in temporary differences.

3.6 PROFIT FOR THE PERIOD

	Three months ended November 30,
	2022	2021	Change
(In thousands of Canadian dollars, except percentages and earnings per share)	$	$	%
Profit for the period	123,808	119,139	3.9
Profit for the period attributable to owners of the Corporation	42,081	38,523	9.2
Profit for the period attributable to non-controlling interest (1)	81,727	80,616	1.4
Basic earnings per share	2.68	2.42	10.7
Diluted earnings per share	2.67	2.41	10.8

(1) At November 30, 2022, the non-controlling interest relates to a participation of approximately 65.3% in the profit for the period attributable to owners of Cogeco Communications in addition to the 21% ownership of Caisse de dépôt et placement du Québec ("CDPQ") in a U.S. subsidiary of Cogeco Communications.

Fiscal 2023 first-quarter profit for the period and profit for the period attributable to owners of the Corporation increased by 3.9% and 9.2%, respectively, as a result of:

• • higher adjusted EBITDA; and
• • lower acquisition, integration, restructuring and other costs; partly offset by
• higher income tax expense;
• higher financial expense; and
• higher depreciation and amortization expense.

4. SEGMENTED OPERATING AND FINANCIAL RESULTS

The Corporation's results are reported in two operating segments: Canadian telecommunications and American telecommunications.

Following the application of the IFRS Interpretations Committee issued agenda decision Demand Deposits with Restrictions on Use arising from a Contract with a Third Party (IAS 7 Statement of Cash Flows) during the third quarter of fiscal 2022, the Corporation changed the label of its "Acquisition of property, plant and equipment" key performance indicator measure to "Net capital expenditures". For further details on the application of this agenda decision, refer to the "Accounting policies" section.

4.1 CANADIAN TELECOMMUNICATIONS

OPERATING AND FINANCIAL RESULTS

		Three months ended November 30,
						Change
	2022 (1)	Foreignexchangeimpact	2022in constantcurrency (2)	2021	Actual	Inconstantcurrency
(In thousands of Canadian dollars, except percentages)	$	$	$	$	%	%
Revenue	372,084	—	372,084	355,047	4.8	4.8
Operating expenses	173,451	(1,168)	172,283	167,186	3.7	3.0
Adjusted EBITDA	198,633	1,168	199,801	187,861	5.7	6.4
Adjusted EBITDA margin (3)	53.4 %			52.9 %
Net capital expenditures	115,238	(3,360)	111,878	67,471	70.8	65.8
Capital intensity (3)	31.0 %			19.0 %

(1) For fiscal 2023 first-quarter, the average foreign exchange rate used for translation was 1.3489 USD/CDN.

(2) Fiscal 2023 first-quarter in constant currency is translated at the average foreign exchange rate of fiscal 2022 first-quarter, which was 1.2559 USD/CDN.

(3) Adjusted EBITDA margin and capital intensity are supplementary financial measures. Adjusted EBITDA margin is calculated as adjusted EBITDA divided by revenue and capital intensity is calculated as net capital expenditures divided by revenue.

REVENUE

Fiscal 2023 first-quarter revenue increased by 4.8% as reported and in constant currency, mainly as a result of:

• higher Internet service customer base and revenue per customer; and
• rate increases implemented for certain services; partly offset by
• an overall decline in video and phone service customers.

OPERATING EXPENSES

Fiscal 2023 first-quarter operating expenses increased by 3.7% (3.0% in constant currency), mainly due to:

• • higher operating expenses, primarily resulting from higher marketing and advertising efforts to drive and support customer growth, and from increased maintenance and information technology costs; partly offset by
• some efficiencies resulting from the organizational changes implemented in the fourth quarter of fiscal 2022; and
• lower phone and video services costs.

ADJUSTED EBITDA

Fiscal 2023 first-quarter adjusted EBITDA increased by 5.7% (6.4% in constant currency), mainly resulting from revenue growth, partly offset by increased operating expenses.

NET CAPITAL EXPENDITURES AND CAPITAL INTENSITY

Fiscal 2023 first-quarter net capital expenditures increased by 70.8% (65.8% in constant currency), mainly due to:

• • the acceleration of construction efforts related to high-speed Internet network expansions primarily in Québec and to a lesser extent in Ontario; and
• • higher purchases of customer premise equipment related to the network expansion projects.

Fiscal 2023 first-quarter capital intensity reached 31.0% compared to 19.0% for the same period of fiscal 2022. The capital intensity increase is mainly explained by higher net capital expenditures related to network expansion projects, partly offset by the revenue growth.

PRIMARY SERVICE UNIT AND CUSTOMER STATISTICS

		Net additions (losses)		% of penetration (1)
		Three months ended November 30,
	November 30,2022	2022	2021	November 30,2022	November 30,2021 (2)
Primary service units	1,807,079	(11,079)	(2,091)
Internet service customers (2)	775,063	2,463	5,606	38.4	38.7
Video service customers	644,329	(8,261)	(4,413)	31.9	34.2
Phone service customers	387,687	(5,281)	(3,284)	19.2	20.6

(1) As a percentage of homes passed.

(2) During the fourth quarter of fiscal 2022, the Corporation modified its definition of Internet service customers in order to be consistent with industry practices. As per the new definition, Internet service customers include only customers who have their Internet service installed, operated and billed directly by the Corporation. The previous definition also included wholesale Internet customers. This change has been applied retrospectively to the comparative figures.

INTERNET

.

Fiscal 2023 first-quarter Internet service customers net additions amounted to 2,463 compared to 5,606 for the same period of the prior year. The fiscal 2023 first-quarter net additions resulted primarily from new customers following fibre-to-the-home network expansions, mainly in Québec. Last year's net additions were elevated, mainly driven by the ongoing interest in high-speed Internet in the context of the COVID-19 pandemic.

VIDEO

Fiscal 2023 first-quarter video service customers net losses amounted to 8,261 compared to 4,413 for the same period of the prior year. The fiscal 2023 first-quarter net losses were mainly due to the continuous change in the video consumption environment, further impacted by the current highly inflationary environment, with an increasing proportion of customers only subscribing to Internet services.

PHONE

Fiscal 2023 first-quarter phone service customers net losses amounted to 5,281 compared to 3,284 for the same period of the prior year. The fiscal 2023 first-quarter net losses were mainly due to a higher level of service disconnections in the context of the continuous increase in mobile wireless penetration and of the current inflationary environment, causing some customers to cancel their landline phone services for mobile phone services only.

DISTRIBUTION OF CUSTOMERS

At November 30, 2022, 66% of the Canadian telecommunications segment's customers subscribed to "double play" or "triple play" bundled services.

4.2 AMERICAN TELECOMMUNICATIONS

OPERATING AND FINANCIAL RESULTS

					Three months ended November 30,
						Change
	2022 (1)	Foreignexchangeimpact	2022in constantcurrency (2)	2021	Actual	Inconstantcurrency
(In thousands of Canadian dollars, except percentages)	$	$	$	$	%	%
Revenue	390,216	(26,910)	363,306	363,494	7.4	(0.1)
Operating expenses	207,710	(14,267)	193,443	187,730	10.6	3.0
Adjusted EBITDA	182,506	(12,643)	169,863	175,764	3.8	(3.4)
Adjusted EBITDA margin (3)	46.8 %			48.4 %
Net capital expenditures	80,408	(5,544)	74,864	73,227	9.8	2.2
Capital intensity (3)	20.6 %			20.1 %

(1) For fiscal 2023 first-quarter, the average foreign exchange rate used for translation was 1.3489 USD/CDN.

(2) Fiscal 2023 first-quarter in constant currency is translated at the average foreign exchange rate of fiscal 2022 first-quarter, which was 1.2559 USD/CDN.

(3) Adjusted EBITDA margin and capital intensity are supplementary financial measures. Adjusted EBITDA margin is calculated as adjusted EBITDA divided by revenue and capital intensity is calculated as net capital expenditures divided by revenue.

REVENUE

Fiscal 2023 first-quarter revenue increased by 7.4% (decrease of 0.1% in constant currency). Revenue in constant currency remained comparable to the same period of the prior year, mainly due to:

• • a higher value product mix; and
• rate increases implemented for certain services; offset by
• a lower customer base primarily due to disconnections in Ohio following the customer management and billing systems' migration during the second half of fiscal 2022.

OPERATING EXPENSES

Fiscal 2023 first-quarter operating expenses increased by 10.6% (3.0% in constant currency), mainly attributable to:

• unusually low spending in marketing and advertising and less staff last year in Ohio while the assets were still operating under the previous owner's brand; partly offset by
• reduced video service costs resulting from the decline in video service customers.

ADJUSTED EBITDA

Fiscal 2023 first-quarter adjusted EBITDA increased by 3.8% (decrease of 3.4% in constant currency). The decrease in constant currency, as expected, is mainly resulting from unusually low spending in marketing and advertising and less staff last year in Ohio while the assets were still operating under the previous owner's brand.

NET CAPITAL EXPENDITURES AND CAPITAL INTENSITY

Fiscal 2023 first-quarter net capital expenditures increased by 9.8% (2.2% in constant currency) and capital intensity reached 20.6% compared to 20.1% for the same period of fiscal 2022, mainly resulting from:

• higher capital expenditures related to the geographical network expansion projects; and
• the timing of certain initiatives.

PRIMARY SERVICE UNIT AND CUSTOMER STATISTICS

			Net additions (losses)Three months ended November 30,	% of penetration (1)
	November 30,2022	2022	2021 (2)	November 30,2022	November 30,2021
Primary service units	1,154,798	(34,365)	(17,972)
Internet service customers	693,781	(14,173)	(77)	40.9	43.4
Video service customers	309,627	(13,411)	(13,383)	18.3	21.0
Phone service customers	151,390	(6,781)	(4,512)	8.9	10.5

(1) As a percentage of homes passed. Homes passed resulting from the Ohio broadband systems acquisition as at September 1, 2021 have been adjusted upwards by approximately 19,000 following the migration of the customer management and billing systems during the third quarter of fiscal 2022. This change has been applied retrospectively to the comparative figures.

(2) Excludes the opening primary service units resulting from the Ohio broadband systems acquisition as at September 1, 2021.

INTERNET

Fiscal 2023 first-quarter Internet service customers net losses amounted to 14,173, of which 10,238 pertained to Ohio, compared to 77 for the same period of the prior year. The increase in net losses was primarily due to the residual impact of the customer management and billing systems' migration in Ohio in late May 2022. The segment was also impacted by an anticipated increase in disconnections in other markets, especially for entry-level Internet services, in the context of a challenging economic environment and a competitive market.

VIDEO

Fiscal 2023 first-quarter video service customers net losses amounted to 13,411 compared to 13,383 for the same period of the prior year. The net losses of fiscal 2023 first-quarter were mainly due to:

• the continued emphasis on offers that are Internet led and the limitation of residential video-only new offers to customers under bulk agreements;
• • the continuous change in the video consumption environment, further impacted by the current highly inflationary environment, with an increasing proportion of customers only subscribing to Internet services; and
• competitive offers in the industry.

PHONE

Fiscal 2023 first-quarter phone service customers net losses amounted to 6,781 compared to 4,512 for the same period of the prior year. The net losses of fiscal 2023 first-quarter were mainly due to:

• • the continued emphasis on offers that are Internet led; and
• • higher level of service disconnections in the context of the continuous increase in mobile wireless penetration and of the current inflationary environment, causing some customers to cancel their landline phone services for mobile phone services only.

DISTRIBUTION OF CUSTOMERS

At November 30, 2022, 35% of the American telecommunications segment's customers subscribed to "double play" or "triple play" bundled services. In recent years, the customer mix from double and triple play bundles has decreased which is in line with the Internet led strategy of focusing on higher margin Internet services.

5. RELATED PARTY TRANSACTIONS

Cogeco held, as of November 30, 2022, 34.7% of Cogeco Communications' equity shares, representing 84.1% of the votes attached to Cogeco Communications' voting shares.

Cogeco provides executive and administrative services to Cogeco Communications under a Management Services Agreement (the "Agreement"). The methodology used to establish the management fees is based on the costs incurred by Cogeco plus a reasonable mark-up. Provision is made for future adjustments upon the request of either Cogeco Communications or the Corporation from time to time during the term of the Agreement. For the first quarter of fiscal 2023, management fees paid to Cogeco amounted to $5.4 million compared to $5.6 million for the same period of fiscal 2022.

No direct remuneration is payable to Cogeco's executive officers by Cogeco Communications. However, during the three-month periods ended November 30, 2022 and 2021, Cogeco Communications granted stock options and performance share units ("PSUs") to these executive officers, as executive officers of Cogeco Communications, as shown in the following table:

	Three months ended November 30,
(In number of units)	2022	2021
Stock options	79,348	72,200
PSUs	14,283	10,100

The following table shows the amounts that Cogeco Communications charged Cogeco with regard to Cogeco Communications' stock options and PSUs granted to these executive officers, as well as deferred share units ("DSUs") issued to Board directors of Cogeco:

	Three months ended November 30,
	2022	2021
(In thousands of Canadian dollars)	$	$
Stock options	355	332
PSUs	143	370
DSUs	(100)	(118)
	398	584

6. CASH FLOWS ANALYSIS

	Three months ended November 30,
	2022	2021 (1)	Change
(In thousands of Canadian dollars, except percentages)	$	$	%
Cash flows from operating activities	193,821	297,342	(34.8)
Cash flows used in investing activities	(234,670)	(1,573,987)	(85.1)
Cash flows from financing activities	64,051	1,311,819	(95.1)
Effect of exchange rate changes on cash and cash equivalents denominated in a foreign currency	6,295	1,390	—
Net change in cash and cash equivalents	29,497	36,564	(19.3)
Cash and cash equivalents, beginning of the period	379,001	551,968	(31.3)
Cash and cash equivalents, end of the period	408,498	588,532	(30.6)

(1) Comparative figures have been restated. For further details, refer to the "Accounting policies" section.

6.1 OPERATING ACTIVITIES

Fiscal 2023 first-quarter cash flows from operating activities decreased by 34.8%, mainly due to:

• changes in other non-cash operating activities, primarily due to the timing of payments of trade and other payables;
• higher interest paid; and
• higher income taxes paid due to the final payment of income tax balances for fiscal 2022; partly offset by
• higher adjusted EBITDA; and
• lower acquisition, integration, restructuring and other costs.

6.2 INVESTING ACTIVITIES

Fiscal 2023 first-quarter cash flows used in investing activities decreased by 85.1%, mainly due to:

• cash flows used in connection with the acquisition of Ohio broadband systems last year which were not present this year; partly offset by
• the increase in acquisition of property, plant and equipment, following accelerated network expansion activities primarily in the Canadian telecommunications segment.

ACQUISITION OF PROPERTY, PLANT AND EQUIPMENT, NET CAPITAL EXPENDITURES AND CAPITAL INTENSITY

		Three months ended November 30,
	2022	2021 (1)	Change	Change inconstantcurrency
(In thousands of Canadian dollars, except percentages)	$	$	%	%
Acquisition of property, plant and equipment	235,008	146,329	60.6
Subsidies received in advance recognized as a reduction of the cost of property, plant andequipment during the period (2)	(37,666)	(4,820)	—
Net capital expenditures	197,342	141,509	39.5	33.2
Net capital expenditures, excluding network expansion projects (3)	131,508	121,493	8.2	3.7

(1) Comparative figures have been restated. For further details, refer to the "Accounting policies" section.

(2) Relates to $187.5 million of government subsidies received in the third quarter of fiscal 2021 in connection with Cogeco Connexion's high-speed Internet network expansion projects, which are recognized against property, plant and equipment based on the costs incurred over the total expected costs.

(3) Net capital expenditures, excluding network expansion projects, is a non-IFRS financial measure. This indicated term does not have a standardized definition prescribed by IFRS and, therefore, may not be comparable to similar measures presented by other companies. For more information on this financial measure, please consult the "Non-IFRS and other financial measures" section.

The net capital expenditures, as well as the capital intensity, per operating segment are as follows:

	Three months ended November 30,
	2022	2021	Change	Change inconstantcurrency (1)
(In thousands of Canadian dollars, except percentages)	$	$	%	%
Canadian telecommunications	115,238	67,471	70.8	65.8
Capital intensity (2)	31.0 %	19.0 %
American telecommunications	80,408	73,227	9.8	2.2
Capital intensity (2)	20.6 %	20.1 %
Corporate and eliminations	1,325	330	—	—
Cogeco Communications	196,971	141,028	39.7	33.4
Capital intensity (2)	25.8 %	19.6 %
Capital intensity, excluding network expansion projects (2)	17.2 %	16.8 %
Other	371	481	(22.9)	(22.9)
Consolidated	197,342	141,509	39.5	33.2

(1) Fiscal 2023 first-quarter actuals are translated at the average foreign exchange rate of fiscal 2022 first-quarter, which was 1.2559 USD/CDN.

(2) Capital intensity is a supplementary financial measure calculated as net capital expenditures divided by revenue. Capital intensity, excluding network expansion projects is a non-IFRS ratio. These 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 information on these financial measures, please consult the "Non-IFRS and other financial measures" section.

Fiscal 2023 first-quarter net capital expenditures increased by 39.5% (33.2% in constant currency), mainly due to:

• • higher capital expenditures in the Canadian telecommunications segment, mostly following the acceleration of construction efforts related to high-speed Internet network expansions and higher purchases of customer premise equipment related to the network expansion projects;
• • higher capital expenditures in the American telecommunications segment related to the geographical network expansion projects; and
• • the timing of certain initiatives in both the Canadian and American telecommunications segments.

Fiscal 2023 first-quarter capital intensity of Cogeco Communications reached 25.8% compared to 19.6% for the same period of the prior year. The capital intensity increase is mainly explained by higher net capital expenditures related to network expansion projects, primarily in the Canadian telecommunications segment, partly offset by the revenue growth. Excluding network expansion projects, Cogeco Communications fiscal 2023 first-quarter capital intensity, reached 17.2% compared to 16.8% for the same period of the prior year.

6.3 FINANCING ACTIVITIES

ISSUANCE AND REPAYMENT OF DEBT

Fiscal 2023 first-quarter changes in cash flows from the issuance and repayment of debt are mainly explained as follows:

		Three months endedNovember 30,
	2022		2021 Explanations
(In thousands of Canadian dollars)	$	$
(Decrease) increase in bank indebtedness	(7,711)		9,978 Repayment following amounts drawn under the revolvingfacilities.
Net increase (decrease) under the revolving facilities	163,726		(231,511) Funds used in the first quarter of fiscal 2023 for disbursementsmade in connection with the NCIB programs and capitalexpenditures, and for payments of the income tax balances forfiscal 2022 and instalments.
Issuance of long-term debt, net of discounts and transactioncosts	—		1,611,539 Mainly related to the Ohio broadband systems acquisitioncompleted in the first quarter of fiscal 2022, which wasfinanced in part through the issuance of a US$900 millionsenior secured Term B loan, and the issuance of $500 millionsenior secured notes.
Repayment of notes, debentures and credit facilities	(8,780)		(40,761) Related to the quarterly repayments on the Senior Secured TermLoan B Facility, with quarterly repayments on Tranche 2 startingin May 2022, and to the repayment of the $35 millionUnsecured Debentures in the first quarter of fiscal 2022.
Repayment of lease liabilities	(1,689)		(1,277) Comparable.
	145,546	1,347,968

DIVIDENDS

During the first quarter of fiscal 2023, a quarterly eligible dividend of $0.731 per share was paid to the holders of multiple and subordinate voting shares, totalling $11.4 million. Last year, due to the timing of the quarterly dividend declared after the fiscal 2022 year-end, for which the dividend was declared on November 11, 2022 and payable to the holders of the multiple and subordinate voting shares on December 9, 2021, no dividend was paid during the first quarter of fiscal 2022.

NORMAL COURSE ISSUER BID ("NCIB")

Cogeco

On January 13, 2022, the TSX accepted Cogeco's notice of intention for a NCIB, enabling it to acquire for cancellation up to 325,000 subordinate voting shares from January 18, 2022 to January 17, 2023, representing approximately 2.3% of the Corporation's outstanding balance of subordinate voting shares as of January 4, 2022. The previous NCIB ended on August 1, 2020.

The NCIB purchases were as follows:

	Three months ended November 30,
	2022	2021
(In thousands of Canadian dollars, except number of shares and weighted average purchase price per share)	$	$
Subordinate voting shares purchased and cancelled	27,700	—
Weighted average purchase price per share	57.87	—
Purchase costs	1,603	—

Cogeco Communications

Cogeco Communications' current NCIB, which was amended on November 24, 2022, enables the Corporation to acquire up to 10% of its float, or 1,960,905 subordinate voting shares for cancellation, from May 4, 2022 to May 3, 2023.

For the three-month periods ended November 30, 2022 and 2021, the NCIB purchases were as follows:

		Three months ended November 30,
	2022	2021
(In thousands of Canadian dollars, except number of shares and weighted average purchase price per share)	$	$
Subordinate voting shares purchased and cancelled	512,170	274,000
Weighted average purchase price per share	72.79	107.69
Purchase costs	37,283	29,508

The Corporation and Cogeco Communications have also entered into an automatic share purchase plan ("ASPP") with a designated broker to allow for the purchase of subordinate voting shares under the NCIB at times when it would ordinarily not be permitted to purchase shares due to regulatory restrictions or self-imposed blackout periods. Such purchases are executed by the broker on parameters established by the Corporation and Cogeco Communications prior to the pre-established ASPP period.

6.4 FREE CASH FLOW

				Three months ended November 30,
	2022 (1)	2021	Change	Change inconstantcurrency (2)	Foreignexchangeimpact (2)
(In thousands of Canadian dollars, except percentages)	$	$	%	%	$
Adjusted EBITDA	373,882	354,394	5.5	2.3	(11,475)
Amortization of deferred transaction costs and discounts on longterm debt	3,062	2,942	4.1
Share-based payment	1,404	1,721	(18.4)
Gain on disposals and write-offs of property, plant and equipment	(71)	(1,093)	(93.5)
Defined benefit plans contributions, net of expense	(269)	434	—
Acquisition, integration, restructuring and other costs	(2,677)	(18,635)	(85.6)
Financial expense	(57,527)	(45,608)	26.1
Current income taxes	(9,290)	(15,549)	(40.3)
Net capital expenditures	(197,342)	(141,509)	39.5
Repayment of lease liabilities	(1,689)	(1,277)	32.3
Free cash flow	109,483	135,820	(19.4)	(19.0)	594
Free cash flow, excluding network expansion projects (3)	175,317	155,836	12.5	10.7	(2,768)

(1) For fiscal 2023 first-quarter, the average foreign exchange rate used for translation was 1.3489 USD/CDN.

(2) Fiscal 2023 first-quarter actuals are translated at the average foreign exchange rate of fiscal 2022 first-quarter, which was 1.2559 USD/CDN.

(3) Free cash flow, excluding network expansion projects is a non-IFRS financial measure. This indicated term does not have a standardized definition prescribed by IFRS and, therefore, may not be comparable to similar measures presented by other companies. For more information on this financial measure, please consult the "Non-IFRS and other financial measures" section.

Fiscal 2023 first-quarter free cash flow decreased by 19.4% (19.0% in constant currency), mainly due to:

• • higher capital expenditures, particularly in the Canadian telecommunications segment, mainly resulting from the network expansion projects; and
• higher financial expense; partly offset by
• lower acquisition, integration, restructuring and other costs;
• higher adjusted EBITDA; and
• lower current income taxes.

Excluding network expansion projects, fiscal 2023 first-quarter free cash flow amounted to $175.3 million ($172.5 million in constant currency), an increase of 12.5% (10.7% in constant currency) compared to $155.8 million for the same period of the prior year.

6.5 DIVIDEND DECLARATION

At its January 12, 2023 meeting, the Board of Directors of Cogeco declared a quarterly eligible dividend of $0.731 per share for multiple and subordinate voting shares, payable on February 9, 2023 to shareholders of record on January 26, 2023. 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.

7. FINANCIAL POSITION

7.1 WORKING CAPITAL

As part of the usual conduct of its business, Cogeco generally maintains a working capital deficiency, when excluding cash and cash equivalents and bank indebtedness, due to a low level of trade and other receivables since a large proportion of the Corporation's customers pay before their services are rendered, while trade and other payables are usually paid after products are delivered or services are rendered.

The variations are as follows:

	November 30,2022	August 31,2022		Change Explanations
(In thousands of Canadian dollars)	$	$	$
Current assets
Cash and cash equivalents	408,498	379,001		29,497 Refer to the "Cash flows analysis" section.
Trade and other receivables	141,482	123,617		17,865 Mainly related to the timing of collection of trade accounts receivableand revenue growth, combined with the appreciation of the US dollaragainst the Canadian dollar.
Income taxes receivable	6,799	7,581		(782) Not significant.
Prepaid expenses and other	57,048	41,830		15,218 Mainly related to the increase in prepayments for annual servicesagreements and the appreciation of the US dollar against theCanadian dollar.
Derivative financial instruments	3,877	3,465		412 Not significant.
	617,704	555,494	62,210
Current liabilities
Bank indebtedness	922	8,633		(7,711) Refer to the "Cash flows analysis" section.
Trade and other payables	362,894	396,480		(33,586) Mainly related to the timing of payments made to suppliers, partlyoffset by higher capital expenditures in relation to the networkexpansion programs underway and the appreciation of the US dollaragainst the Canadian dollar.
Provisions	25,235	28,942		(3,707) Not significant.
Income tax liabilities	420	39,251		(38,831) Related to the final payment of income tax balances for fiscal 2022.
Contract liabilities and otherliabilities	62,240	64,221		(1,981) Not significant.
Government subsidies received inadvance	90,368	127,851		(37,483) Related to the network construction progress in Québec.
Derivative financial instruments	2,831	2,273		558 Not significant.
Current portion of long-term debt	341,880	340,468		1,412 Not significant.
	886,790	1,008,119	(121,329)
Working capital deficiency	(269,086)	(452,625)	183,539

7.2 OTHER SIGNIFICANT CHANGES

	November 30,2022	August 31,2022	Change Explanations
(In thousands of Canadian dollars)	$	$	$
Non-current assets
Property, plant and equipment	3,165,841	3,061,177	104,664 Mainly related to capital investments made during the first quarter offiscal 2023 and the appreciation of the US dollar against the Canadiandollar, partly offset by the depreciation expense for the period.
Intangible assets	3,710,366	3,656,790	53,576 Mainly related to the appreciation of the US dollar against the Canadiandollar, partly offset by the amortization expense for the period.
Goodwill	2,065,994	2,010,510	55,484 Related to the appreciation of the US dollar against the Canadian dollar.
Derivative financial instruments	122,959	95,537	27,422 Mainly related to changes in market interest rates impacting the interestswap agreements' valuation.
Non-current liabilities
Long-term debt	4,671,508	4,398,142	273,366 Mainly related to the amounts drawn under the revolving facilities and theappreciation of the US dollar against the Canadian dollar, partly offset bythe quarterly repayments on the Senior Secured Term B Facility.
Deferred tax liabilities	813,805	773,036	40,769 Mainly related to the timing of temporary differences and theappreciation of the US dollar against the Canadian dollar.

8. CAPITAL RESOURCES AND LIQUIDITY

8.1 CAPITAL STRUCTURE

The table below summarizes the Corporation's available liquidity:

	At November 30,2022	At August 31,2022
(In thousands of Canadian dollars)	$	$
Cash and cash equivalents	408,498	379,001
Cash with restrictions on use (1)	(90,368)	(127,851)
Amounts available under revolving credit facilities (2)	733,107	888,276
Available liquidity (3)	1,051,237	1,139,426

(1) In connection with government subsidies received in advance, pertaining mainly to Cogeco Connexion's high-speed Internet network expansion projects (see Note 15 D)) of the Corporation's condensed interim consolidated financial statements).

(2) Total amount available under the $750 million and $100 million term revolving facilities and the US$150 million Senior Secured Revolving Facility (see Note 16 A) of the Corporation's condensed interim consolidated financial statements).

(3) Available liquidity is a non-IFRS financial measure. This indicated term does not have a standardized definition prescribed by IFRS and, therefore, may not be comparable to similar measures presented by other companies. For more information on this financial measure, please consult the "Non-IFRS and other financial measures" section.

The financial covenants related to the indebtedness of Cogeco Inc. are primarily based on a ratio of net indebtedness to adjusted EBITDA, computed on the basis of the Cogeco Media subsidiary's adjusted EBITDA results and the dividends and management fees received from Cogeco Communications, net of corporate expenses.

COGECO COMMUNICATIONS

The table below summarizes certain of Cogeco Communications' key ratios used to monitor and manage Cogeco Communications' capital structure. Net indebtedness reflects the US denominated debt converted at the exchange rate at the end of the period, while adjusted EBITDA and financial expense reflect the average exchange rate throughout the corresponding 12-month period.

	November 30, 2022	August 31, 2022
Net indebtedness / adjusted EBITDA ratio (1) (2)	3.3	3.2
Adjusted EBITDA / financial expense ratio (1) (2)	7.1	7.4

(1) Net indebtedness to adjusted EBITDA ratio and adjusted EBITDA to financial expense ratio are capital management measures. These 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 information on these financial measures, please consult the "Non-IFRS and other financial measures" section.

(2) Calculated on a 12-month trailing basis.

At November 30, 2022, Cogeco Communications' weighted average cost of indebtedness, excluding the amortization of deferred transaction costs and commitment fees but including the impact of interest rate swaps, was 4.5%.

8.2 OUTSTANDING SHARE DATA

A description of Cogeco's share data at December 31, 2022 is presented in the table below. Additional details are provided in Note 13 B) of the condensed interim consolidated financial statements.

(In thousands of Canadian dollars, except number of shares)	Number of shares	Amount$
Common shares
Multiple voting shares	1,602,217	10
Subordinate voting shares	14,138,636	113,147

8.3 FINANCING

On December 21, 2022, Cogeco Communications amended its $750 million Term Revolving Facility to extend the maturity by one additional year to January 24, 2028. The amendment also replaces LIBOR with the Secured Overnight Financing Rate ("SOFR") as the benchmark interest rate.

Furthermore, in December 2022, Cogeco Communications entered into a 20-year senior unsecured non-revolving facility, having an aggregate principal amount of up to $38.1 million, with the Canada Infrastructure Bank. The credit facility can only be drawn to finance the network expansion projects undertaken in connection with Ontario's Accelerated High Speed Internet Program.

8.4 COGECO COMMUNICATIONS' CREDIT RATINGS

The table below shows Cogeco Communications' and the U.S. subsidiaries' credit ratings:

At November 30, 2022	S&P	DBRS	Moody's
Cogeco Communications
Senior Secured Notes and Debentures	BBB-	BBB (low)	NR
Corporate credit issuer default rating	BB+	BB (high)	NR
U.S. subsidiaries
First Lien Credit Facilities	BB	NR	B1
Corporate credit issuer default rating	BB	NR	B1

NR : Not rated

Ratings for long-term debt instruments across the universe of composite rates range from "AAA" (S&P and DBRS) or "Aaa" (Moody's), representing the highest quality of securities rated, to "D" (S&P and DBRS) and "C" (Moody's) for the lowest quality of securities rated. Ratings are based on several industry and company specific factors which include financial leverage as one of the key elements considered.

Our ability to access debt capital markets and bank credit markets and the cost and amount of funding available partly depends on the quality of our credit ratings. Obligations rated in the "BBB" category are considered investment grade and their cost of funding is typically lower relative to the "BB/B" rating category. In addition, obligations with "BBB" ratings generally have greater access to funding than those with "BB/B" ratings.

8.5 FINANCIAL RISK MANAGEMENT

Management's objectives are to protect the Corporation and its subsidiaries against material economic exposures and variability of results, and against certain financial risks including credit, liquidity, interest rate, foreign exchange and market risks which are described in the Corporation's 2022 annual consolidated financial statements.

Credit risk

The Corporation is exposed to credit risk arising from the derivative financial instruments, cash and cash equivalents and trade accounts receivable, the maximum exposure of which is represented by the carrying amounts reported on the condensed interim consolidated statements of financial position.

The Corporation reduces the credit risk with regard to the derivative financial instruments by completing transactions with financial institutions that carry a high credit rating. At November 30, 2022, management believes this credit risk to be minimal, since the lowest credit rating of the counterparties to the agreements is "A-" by Standard & Poor's rating services ("S&P").

Cash equivalents consist mainly of short-term, highly liquid investments. The Corporation has deposited the cash and cash equivalents with reputable financial institutions, for which management believes the risk of loss to be remote.

To mitigate the credit risk in relation to its trade accounts receivable, the Corporation continuously monitors the financial condition of its customers and reviews the credit history or worthiness of each new large customer. The Corporation has credit policies in place and has established various credit controls, including credit checks, deposits on accounts and advance billing, and has also established procedures to suspend the availability of services when customers have fully utilized approved credit limits or have violated existing payment terms. Furthermore, a large portion of the Corporation's customers are billed and pay before the services are rendered. The Corporation believes that its allowance for doubtful accounts is sufficient to cover the related credit risk. Since the Corporation has a large and diversified clientele dispersed throughout its market areas in Canada and the United States, there is no significant concentration of credit risk.

Liquidity risk

At November 30, 2022, the Corporation had used $39.8 million of its $100 million Term Revolving Facility and an amount of $276.0 million was used from Cogeco Communications' Term Revolving Facility of $750 million, for remaining availabilities of $60.2 million and $474.0 million, respectively. In addition, Cogeco Communications' U.S. subsidiaries benefit from a Senior Secured Revolving Facility of $202.6 million (US$150 million), of which $3.7 million (US$2.7 million) was used at November 30, 2022 for a remaining availability of $199.0 million (US$147.3 million).

Interest rate risk

The Corporation and its subsidiary, Cogeco Communications, are exposed to interest rate risk on their floating interest rate instruments. Interest rate fluctuations will have an effect on the repayment of these instruments. At November 30, 2022, all of the Corporation's and Cogeco Communications' long-term debt was at fixed rate, except for the amounts drawn under the Corporation's Term Revolving Facility and Cogeco Communications' Term Revolving Facility and First Lien Credit Facilities, which are subject to floating interest rates.

To reduce the risk on the floating interest rate instruments and mitigate the impact of interest rate variations, Cogeco Communications' U.S. subsidiary entered into fixed interest rate swap agreements. The following table shows the interest rate swaps outstanding at November 30, 2022:

Type of hedge	Notional amount	Receive interest rate	Pay interest rate (1)	Maturity	Hedged item
Cash flow	US$770 million	US LIBOR base rate	2.017% - 2.262%	January 2023 -November 2024	Senior Secured Term Loan B - Tranche 1
Cash flow	US$800 million	US LIBOR base ratewith a 50 bps floor	1.224% - 1.463%	October 2025 -July 2027	Senior Secured Term Loan B - Tranche 2

(1) The interest rate does not include the applicable credit spread.

The sensitivity of the Corporation's annual financial expense to an increase of 1% in the interest rate applicable to the unhedged portion of these facilities would represent an increase of approximately $15.4 million based on the outstanding debt and swap agreements at November 30, 2022.

Foreign exchange risk

The Corporation is exposed to foreign exchange risk with respect to the interest, amounting to $182.3 million, associated with its notes, debentures and credit facilities denominated in US dollars. The impact of a 10% increase in the exchange rate of the US dollar to the Canadian dollar would increase financial expense by approximately $18.2 million based on the outstanding debt and swap agreements at November 30, 2022.

Furthermore, a foreign currency exposure arises from Cogeco Communications' net investment in its U.S. subsidiary, as a result of the translation of the net investment into the Corporation's functional currency. A portion of Cogeco Communications' net investment in its U.S. subsidiary is hedged by Cogeco Communications' US dollar denominated Senior Secured Notes, which were designated as hedges of the net investment, while a portion is economically hedged by the U.S. subsidiary's US dollar denominated First Lien Credit Facilities.

The exchange rate used to translate the US dollar currency to the Canadian dollar for the consolidated statement of financial position accounts at November 30, 2022 was $1.3508 ($1.3111 at August 31, 2022) per US dollar. A 10% decrease in the exchange rate of the US dollar to the Canadian dollar would decrease other comprehensive income by approximately $121.6 million.

8.6 FOREIGN CURRENCY

For the three-month periods ended November 30, 2022 and 2021, the average rates prevailing used to convert the operating results of the American telecommunications segment were as follows:

	Three months ended November 30,
Years ended August 31,	2022	2021
	$	$
US dollar vs Canadian dollar	1.3489	1.2559

9. FISCAL 2023 REVISED FINANCIAL GUIDELINES

The following section contains forward-looking statements concerning the business outlook for Cogeco and Cogeco Communications. For a description of risk factors that could cause actual results to differ materially from what Cogeco and Cogeco Communications expect, please refer to the "Uncertainties and main risk factors" section of the Corporation's current MD&A and 2022 annual MD&A, and Cogeco Communications' fiscal 2023 first-quarter and 2022 annual MD&A.

Cogeco and Cogeco Communications have revised their fiscal 2023 financial guidelines as issued on July 13, 2022 for revenue, adjusted EBITDA and net capital expenditures. Cogeco Communications has also revised its capital intensity financial guidelines. Free cash flow projections remain the same as previously disclosed for both corporations. Cogeco and Cogeco Communications expect a reduction in revenue growth rates, driven by a lower customer base than expected in Ohio, and to a lesser extent, by the current economic conditions which are impacting customers' discretionary spending, especially for the Corporation's entry-level services, and by increasing competition. Cogeco and Cogeco Communications have initiated several cost optimization initiatives in order to minimize the revenue impact on adjusted EBITDA, and with a prudent cash management strategy, net capital expenditures are expected to be lower than under the previous financial guidelines.

The Corporation presents its fiscal 2023 revised financial guidelines and those of Cogeco Communications on a constant currency basis and believes this presentation enables an improved understanding of the Corporation's underlying financial performance, undistorted by the effects of changes in foreign currency rates. Measures on a constant currency basis are considered non-IFRS financial measures and ratios, and do not have any standardized meaning prescribed by IFRS and therefore, may not be comparable to similar measures presented by other companies. The financial guidelines exclude the impact from other possible business acquisitions and do not take into consideration unusual adjustments that could result from regulatory environment changes or unforeseeable non-recurring items.

Cogeco

The Corporation's fiscal 2023 revised financial guidelines are mainly driven by those of Cogeco Communications, which are described below.

The following table outlines the Corporation's fiscal 2023 revised financial guidelines ranges compared to fiscal 2022 actual results, on a constant currency and consolidated basis, as well as the previous financial guidelines issued on July 13, 2022:

	January 12, 2023	July 13, 2022
	Revised projections (1)	Original projections (1)	Actual
	Fiscal 2023(constant currency) (2)	Fiscal 2023(constant currency) (2)	Fiscal 2022
(In millions of Canadian dollars, exceptpercentages)	$	$	$
Financial guidelines
Revenue	Increase of 0.5% to 2.0%	Increase of 2% to 4%	2,995
Adjusted EBITDA	Increase of 0.5% to 2.0%	Increase of 1.5% to 3.5%	1,406
Net capital expenditures	$700 to $775	$750 to $800	692
Net capital expenditures in connection withnetwork expansion projects	$180 to $230	$180 to $230	157
Free cash flow	Decrease of 2% to 12% (3)	Decrease of 2% to 12% (3)	433
Free cash flow, excluding network expansionprojects	(3)Decrease of 5% to an increase of 5%	Decrease of 5% to an increase of 5%	(3)590

(1) Percentage of changes compared to fiscal 2022.

(2) Fiscal 2023 financial guidelines are based on a USD/CDN constant exchange rate of 1.2718 USD/CDN.

(3) The assumed current income tax effective rate is approximately 11%.

Cogeco Communications

On a constant currency and consolidated basis, Cogeco Communications expects fiscal 2023 revenue to grow between 0.5% to 2.0% as a result of organic growth in both the Canadian and American telecommunications segments. On a constant currency and consolidated basis, fiscal 2023 adjusted EBITDA should grow between 0.5% and 2.0%, mainly as a result of revenue growth being offset by an increase in operating expenses. The increase in operating expenses is primarily driven by the inflationary environment, as well as by projects undertaken to support the Corporation's future growth, partly offset by several cost optimization initiatives.

Net capital expenditures should amount to between $700 and $775 million, including approximately $180 to $230 million in growthoriented network expansion projects, resulting in a capital intensity range between 24% to 26%, or 17% to 19% excluding network expansion projects. The Canadian telecommunications segment is planning higher than usual capital intensity primarily due to government sponsored network expansion projects which will increase the Corporation's footprint in the provinces of Québec and Ontario. The American telecommunications segment is also undertaking network expansion projects which will increase the Corporation's footprint in several areas adjacent to its network, as well as finalizing the Ohio integration.

Free cash flow on a constant currency and consolidated basis should decrease between 2% and 12%, mainly due to the growth of adjusted EBITDA more than offset by higher capital intensity and the increase in financial expense due to expected higher interest rates, partly offset by lower acquisition, integration, restructuring and other costs. Excluding the fiscal 2023 network expansion projects, free cash flow on a constant currency and consolidated basis would otherwise be within a range encompassing a decrease of 5% to an increase of 5%.

The following table outlines the Corporation's fiscal 2023 revised financial guidelines ranges compared to fiscal 2022 actual results, on a constant currency and consolidated basis, as well as the previous financial guidelines issued on July 13, 2022:

	January 12, 2023	July 13, 2022
	Revised projections (1)	Original projections (1)	Actual
	Fiscal 2023(constant currency) (2)	Fiscal 2023(constant currency) (2)	Fiscal 2022
(In millions of Canadian dollars, exceptpercentages)	$	$	$
Financial guidelines
Revenue	Increase of 0.5% to 2.0%	Increase of 2% to 4%	2,901
Adjusted EBITDA	Increase of 0.5% to 2.0%	Increase of 1.5% to 3.5%	1,393
Net capital expenditures	$700 to $775	$750 to $800	689
Net capital expenditures in connection withnetwork expansion projects	$180 to $230	$180 to $230	157
Capital intensity	24% to 26%	Approximately 26%	23.8 %
Capital intensity, excluding network expansionprojects	17% to 19%	Approximately 19%	18.3 %
Free cash flow	Decrease of 2% to 12% (3)	Decrease of 2% to 12% (3)	424
Free cash flow, excluding network expansionprojects	Decrease of 5% to an increase of 5%	(3)Decrease of 5% to an increase of 5%	(3)582

(1) Percentage of changes compared to fiscal 2022.

(2) Fiscal 2023 financial guidelines are based on a USD/CDN constant exchange rate of 1.2718 USD/CDN.

(3) The assumed current income tax effective rate is approximately 11%.

10. ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG) PRACTICES

The Corporation has defined its environmental, social and governance (ESG) strategy, guided by its core organizational values, with commitments centered on the key ESG levers of reducing its environmental footprint, implementing strong governance practices and supporting its stakeholders. The Corporation monitors its sustainability related progress based on a set of key performance indicators that are reviewed as needed to ensure continued relevance.

For details on the Corporation's ESG strategy and related achievements and priorities, please refer to the "Environmental, social and governance (ESG) practices" section of the Corporation's 2022 annual MD&A, available at www.sedar.com and corpo.cogeco.com, and the ESG and Sustainability report published in March 2022, available on the Corporation's website at corpo.cogeco.com. Detailed KPIs can be found in Cogeco's ESG data supplement, which is also available on the Corporation's website at <corpo.cogeco.com>.

11. CONTROLS AND PROCEDURES

Internal control over financial reporting ("ICFR") is a process designed to provide reasonable, but not absolute, assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS. 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 ("DC&P") and ICFR, as defined in National Instrument 52-109. Cogeco's internal control framework is based on the criteria published in the updated version released in May 2013 of the report Internal Control – Integrated Framework published by the Committee of Sponsoring Organizations of the Treadway Commission.

The CEO and CFO, supported by management, evaluated the design of the Corporation's DC&P and ICFR at November 30, 2022, and concluded that they are adequate. Furthermore, no significant changes to the internal controls over financial reporting occurred during the three-month period ended November 30, 2022.

12. UNCERTAINTIES AND MAIN RISK FACTORS

A detailed description of the uncertainties and main risk factors faced by Cogeco can be found in the 2022 annual MD&A, available at www.sedar.com and corpo.cogeco.com, which are hereby incorporated by reference. There has been no significant change in the uncertainties and main risk factors faced by the Corporation.

13. ACCOUNTING POLICIES

13.1 CHANGE IN ACCOUNTING POLICIES

Demand Deposits with Restrictions on Use arising from a Contract with a Third Party (IAS 7 Statement of Cash Flows)

During the third quarter of fiscal 2022, the Corporation changed the presentation of the cash from subsidies received in advance, following the application of the IFRS Interpretations Committee's agenda decision Demand Deposits with Restrictions on Use arising from a Contract with a Third Party (IAS 7 Statement of Cash Flows). These funds, which were previously presented as Restricted cash, were reclassified as Cash and cash equivalents in the Corporation's consolidated statements of financial position and consolidated statements of cash flows, on a retrospective basis. The application of this agenda decision had no impact on the ultimate recognition of the subsidies, for which Property, plant and equipment continues to be recorded net of subsidies, within the consolidated statement of financial position.

The changes in presentation for the comparative period presented in the condensed interim consolidated financial statements are summarized as follows:

Consolidated statements of cash flows

Three months ended November 30, 2021	As previouslyreported	Effect of change inpresentation	As currentlyreported
(In thousands of Canadian dollars)	$	$	$
Cash flows from investing activities
Acquisition of property, plant and equipment (1)	(141,509)	(4,820)	(146,329)
Net change in cash and cash equivalents	41,384	(4,820)	36,564
Cash and cash equivalents, beginning of the period (2)	368,434	183,534	551,968
Cash and cash equivalents, end of the period	409,818	178,714	588,532

(1) The application of this agenda decision resulted in an increase of $4.8 million in Acquisition of property, plant and equipment, in the Corporation's interim consolidated statement of cash flows for the three-month period ended November 30, 2021, as subsidies received in advance were previously presented as a reduction of Acquisition of property, plant and equipment based on the costs incurred in connection with these subsidized projects over the total expected costs.

(2) At August 31, 2021, restricted cash totalling $183.5 million was reclassified to Cash and cash equivalents, in the Corporation's consolidated statements of financial position and consolidated statements of cash flows.

13.2 FUTURE CHANGES TO STANDARDS, INTERPRETATIONS AND AMENDMENTS TO STANDARDS AND INTERPRETATIONS

New standards, interpretations and amendments to standards and interpretations were issued by the IASB or the IFRS Interpretations Committee, but have not yet been applied in preparing the condensed interim consolidated financial statements. The following issued amendments to standards may have an impact on future consolidated financial statements of the Corporation:

Classification of Liabilities as Current or Non-current andNon-current Liabilities with Covenants - Amendments toIAS 1, Presentation of Financial Statements

In January 2020, the IASB issued Classification of Liabilities as Current or Noncurrent (Amendments to IAS 1) to clarify the criterion for classifying a liability asnon-current relating to the right to defer settlement of the liability for at leasttwelve months after the reporting period. In October 2022, the IASB issued Noncurrent Liabilities with Covenants (Amendments to IAS 1) to clarify how conditionswith which an entity must comply within twelve months after the reporting periodaffect the classification of a liability. The amendments also require an entity todisclose additional information in the notes to the financial statements to enablestakeholders to understand the risk that non-current liabilities could becomerepayable within twelve months after the reporting date. The amendments areeffective for annual reporting periods beginning on or after January 1, 2024, withearlier application permitted. The Corporation is currently assessing the impact ofthese amendments on its consolidated financial statements.

Disclosure of Accounting Policies - Amendments to IAS 1,Presentation of Financial Statements, and IFRS PracticeStatement 2

In February 2021, the IASB amended IAS 1 to require entities to disclose theirmaterial accounting policy information rather than their significant accountingpolicies. Further amendments to IAS 1 are made to explain how an entity canidentify a material accounting policy. The amendments are effective for annualreporting periods beginning on or after January 1, 2023, with earlier applicationpermitted. The Corporation is currently assessing the impact of these amendmentson its accounting policies disclosure.

14. NON-IFRS AND OTHER FINANCIAL MEASURES

This section describes non-IFRS and other financial measures used by Cogeco throughout this MD&A. These financial measures are reviewed in assessing the performance of Cogeco and used in the decision-making process with regard to its business units. Cogeco is also providing information below for certain specified financial measures excluding network expansion projects, as it had issued financial guidelines excluding the impact of these projects on certain of its key performance indicators.

Non-IFRS financial measures

The following financial measures used by the Corporation do not have standardized definitions prescribed by IFRS and therefore, may not be comparable to similar measures disclosed by other companies. Reconciliations, or references to the specific sections within the MD&A where these reconciliations are provided, as applicable, between these non-IFRS financial measures to the most directly comparable IFRS financial measures are provided below.

Specifiedfinancialmeasures	Usefulness	Calculation	Most directlycomparable IFRSfinancialmeasures
Constantcurrency basisand foreignexchangeimpact	TheCorporationpresentscertainfinancialmeasures in constant currency to enable animproved understanding of its underlying financialperformance, undistorted by the effects of changesin foreign exchange rates, in order to facilitateperiod-to-period comparisons. Financial measurespresented on a constant currency basis includefinancial guidelines and certain historical financialmeasures, including revenue, operating expenses,adjusted EBITDA, net capital expenditures andfree cash flow.	Financial guidelines presented on a constantcurrency basis are obtained by translating expectedfinancial results denominated in US dollars at theforeign exchange rates of the prior fiscal year.Historical financial measures presented on aconstant currency basis are obtained by translatingfinancialresultsfromthecurrentperioddenominated in US dollars at the foreign exchangerates of the comparable period of the prior year.Foreignexchangeimpactrepresentsthequantification of such impact.	Revenue,operatingexpenses,adjustedEBITDA and netcapitalexpenditures.For free cashflow, refer to thedefinition belowfor the mostdirectlycomparableIFRS financialmeasure.
Organicrevenue inconstantcurrency andadjustedEBITDA inconstantcurrency	Organic revenue in constant currency and adjustedEBITDA in constant currency are used bymanagement to analyze the Corporations' revenueand adjusted EBITDA growth excluding the effectsof changes in foreign exchange rates and theimpact of acquisitions, in order to facilitate periodto-period comparisons. Management believes thesemeasures are used by certain investors andanalysts to evaluate the Corporation's performance.	Revenue in constant currency (as calculated perabove)deduct:- impact of acquisitions.Adjusted EBITDA in constant currency (ascalculated per above)deduct:- impact of acquisitions.	Revenue andadjustedEBITDA.

Specifiedfinancialmeasures	Usefulness	Calculation	Most directlycomparable IFRSfinancialmeasures
Free cash flowand free cashflow, excludingnetworkexpansionprojects	Free cash flow and free cash flow, excludingnetworkexpansionprojectsareusedbymanagement to measure the Corporation's abilityto repay debt, distribute capital to its shareholdersand finance its growth. Management believesthese measures are used by certain investors andanalysts to value the Corporation's business and itsunderlying assets, and to assess the Corporation'sfinancial strength and performance.Free cash flow excludes certain items thatmanagementbelievescouldaffectthecomparability of the Corporation's financial resultsand could potentially distort the analysis of trendsin business performance. Excluding these itemsdoes not imply they are non-recurring.The Corporation also measures free cash flowexcludingnetworkexpansionprojectsasitprovides a common basis for comparing the impactof the net capital expenditures to the impact of thehistorical net capital expenditures prior to theacceleration of the network expansion projects. Inaddition, management believes this helps certaininvestors and analysts to assess the impact of thenetwork expansion projects on the Corporation'sfree cash flow. Excluding the impact of net capitalexpenditure in connection with network expansionprojects does not imply it is non-recurring.	Free cash flow:- Adjusted EBITDAadd:- Amortization of deferred transaction costs anddiscounts on long-term debt;- Share-based payment;- Loss (gain) on disposals and write-offs of property,plant and equipment; and- Defined benefit plans expense, net of contributionsdeduct:- Acquisition, integration, restructuring and othercosts;- Financial expense;- Current income taxes;- Net capital expenditures; and- Repayment of lease liabilities.	Cash flows fromoperatingactivities
		Free cash flow, excluding network expansionprojects:- Free cash flowadd:- Net capital expenditures in connection withnetwork expansion projects.
Net capitalexpenditures,excludingnetworkexpansionprojects	Netcapitalexpenditures,excludingnetworkexpansionprojectsisameasureusedbymanagement to assess the Corporation's totalcapitalinvestments,withouttakingintoconsideration capitalized investments in networkexpansion projects, as it provides a common basisfor comparing the net capital expenditures tohistorical net capital expenditures prior to theacceleration of the network expansion projects. Inaddition, management believes this helps certaininvestors and analysts to assess the impact of thenetwork expansion projects on the net capitalexpenditures. This measure is also used in thecalculation of the free cash flow, excludingnetwork expansion projects. Excluding the impactof net capital expenditure in connection withnetwork expansion projects does not imply it isnon-recurring.	Net capital expendituresdeduct:- Net capital expenditures in connection withnetwork expansion projects.	Acquisition ofproperty, plantand equipment
Availableliquidity	Management uses available liquidity to assessCogeco's ability to meet its financial obligationsand ensure there is sufficient liquidity to supportits capital requirements, including development ofthe business by acquisition and other growthopportunities. Available liquidity is presented on aconsolidated basis, including the liquidity ofdistinct borrowing structures for the Canadian andAmericantelecommunicationssegments.Management believes this measure is used bycertain investors and analysts to assess Cogeco'sfinancial strength.	Cash and cash equivalentsdeduct:- Cash with restrictions on use;add:- Amounts available under revolving credit facilities.	Cash and cashequivalents

CONSTANT CURRENCY BASIS AND FOREIGN EXCHANGE IMPACT RECONCILIATION

Consolidated

For the reconciliations of consolidated revenue, operating expenses and adjusted EBITDA in constant currency to the most directly comparable IFRS financial measures, refer to sub-section 3.1 "Operating results".

The reconciliations of free cash flow and net capital expenditures in constant currency are as follows. For the reconciliations of these specified financial measures to the most directly comparable IFRS financial measures, refer to the specific reconciliations in the sub-sections below.

					Three months ended November 30,
						Change
	2022	Foreignexchangeimpact	2022in constantcurrency	(1)2021	Actual	Inconstantcurrency
(In thousands of Canadian dollars, except percentages)	$	$	$	$	%	%
Free cash flow	109,483	594	110,077	135,820	(19.4)	(19.0)
Net capital expenditures	197,342	(8,904)	188,438	141,509	39.5	33.2

(1) Fiscal 2023 first-quarter in constant currency is translated at the average foreign exchange rate of fiscal 2022 first-quarter, which was 1.2559 USD/CDN.

Segmented

For the reconciliations of segmented revenue, operating expenses, adjusted EBITDA and net capital expenditures in constant currency to the most directly comparable IFRS financial measures, refer to section 4 "Segmented operating and financial results".

FREE CASH FLOW RECONCILIATION

	Three months ended November 30,
	2022	2021
(In thousands of Canadian dollars)	$	$
Cash flows from operating activities	193,821	297,342
Amortization of deferred transaction costs and discounts on long-term debt (1)	3,062	2,942
Changes in other non-cash operating activities	69,949	(19,729)
Income taxes paid	47,293	26,336
Current income taxes	(9,290)	(15,549)
Interest paid	61,206	32,872
Financial expense	(57,527)	(45,608)
Net capital expenditures	(197,342)	(141,509)
Repayment of lease liabilities	(1,689)	(1,277)
Free cash flow	109,483	135,820

(1) Included within financial expense.

AVAILABLE LIQUIDITY RECONCILIATION

For the reconciliation of available liquidity to the most directly comparable IFRS financial measure, refer to sub-section 8.1 "Capital structure".

NET CAPITAL EXPENDITURES AND FREE CASH FLOW EXCLUDING NETWORK EXPANSION PROJECTS RECONCILIATIONS

Net capital expenditures

					Three months ended November 30,
						Change
	2022	Foreignexchangeimpact	2022in constantcurrency (1)	2021	Actual	Inconstantcurrency
(In thousands of Canadian dollars, except percentages)	$	$	$	$	%	%
Net capital expenditures	197,342	(8,904)	188,438	141,509	39.5	33.2
Net capital expenditures in connection with network expansionprojects	65,834	(3,362)	62,472	20,016	—	—
Net capital expenditures, excluding network expansion projects	131,508	(5,542)	125,966	121,493	8.2	3.7

(1) Fiscal 2023 first-quarter in constant currency is translated at the average foreign exchange rate of fiscal 2022 first-quarter, which was 1.2559 USD/CDN.

Free cash flow

						Change
	2022	Foreignexchangeimpact	2022in constantcurrency (1)	2021	Actual	Inconstantcurrency
(In thousands of Canadian dollars, except percentages)	$	$	$	$	%	%
Free cash flow	109,483	594	110,077	135,820	(19.4)	(19.0)
Net capital expenditures in connection with network expansionprojects	65,834	(3,362)	62,472	20,016	—	—
Free cash flow, excluding network expansion projects	175,317	(2,768)	172,549	155,836	12.5	10.7

(1) Fiscal 2023 first-quarter in constant currency is translated at the average foreign exchange rate of fiscal 2022 first-quarter, which was 1.2559 USD/CDN.

Non-IFRS ratios

The following financial measures used by the Corporation do not have standardized definitions prescribed by IFRS and therefore, may not be comparable to similar measures disclosed by other companies. This MD&A refers to the capital intensity, excluding network expansion projects of Cogeco Communications as it is used by Cogeco Communications to assess the impact of the network expansion projects on the capital intensity.

Specifiedfinancialmeasures	Usefulness	Calculation
Change inconstantcurrency	The Corporation presents changes of certain financialmeasures in constant currency to enable an improvedunderstanding of its underlying financial performance,undistorted by the effects of changes in foreign exchangerates, in order to facilitate period-to-period comparisons.	Change in constant currency, expressed as a percentage ofthe variation between the periods presented, is obtained bytranslating financial results from the current perioddenominated in US dollars using the foreign exchange ratesof the comparable period of the prior year.
Organic revenuegrowth inconstantcurrency andorganic adjustedEBITDA growthin constantcurrency	Organic revenue growth in constant currency and organicadjusted EBITDA growth in constant currency are used bymanagement to analyze the Corporations' revenue andadjusted EBITDA growth excluding the effects of changesin foreign exchange rates and the impact of acquisitions,inordertofacilitateperiod-to-periodcomparisons.Management believes these measures are used by certaininvestors and analysts to evaluate the Corporation'sperformance.	Revenue and adjusted EBITDA changes in constant currency(as calculated above), expressed as a percentage of thevariation between the periods presented, adjusted for theimpact of acquisitions.

Three months ended November 30,

Specifiedfinancialmeasures	Usefulness	Calculation
Capital intensity,excludingnetworkexpansionprojects	Capital intensity, excluding network expansion projects isused by Cogeco Communications' management to assessCogecoCommunications'investmentincapitalexpenditures and to make certain decisions, without takinginto consideration capitalized investments in networkexpansion projects, in order to support a certain level ofrevenue.CogecoCommunicationsmeasurescapitalintensity, excluding network expansion projects, as itprovides a common basis for comparing the impact of thenet capital expenditures to the impact of the historical netcapital expenditures prior to the acceleration of thenetworkexpansionprojects.Inaddition,CogecoCommunications' management believes this helps certaininvestors and analysts to assess the impact of the networkexpansion projects on Cogeco Communications' capitalintensity ratio. Excluding the impact of net capitalexpenditures in connection with network expansionprojects does not imply it is non-recurring.	Net capital expenditures, excluding network expansionprojects divided by revenue.Netcapitalexpenditures,excludingnetworkcapitalexpenditures is a non-IFRS financial measure. For moredetails on net capital expenditures, excluding networkexpansion projects, please refer to the "Non-IFRS financialmeasures" sub-section.

Total of segments measures

The following financial measures used by Cogeco are total of segments measures as reported in Note 4 of the condensed interim consolidated financial statements. Reconciliations between these specified financial measures to the most directly comparable IFRS financial measures are provided below.

Specified financial measures	Most directly comparable IFRS financial measures
Adjusted EBITDA	Profit for the period
Net capital expenditures	Acquisition of property, plant and equipment

ADJUSTED EBITDA RECONCILIATION

	Three months ended November 30,
	20222021
(In thousands of Canadian dollars)	$	$
Profit for the period	123,808	119,139
Income taxes	33,480	18,383
Financial expense	57,527	45,608
Depreciation and amortization	156,390	152,629
Acquisition, integration, restructuring and other costs	2,677	18,635
Adjusted EBITDA	373,882	354,394

NET CAPITAL EXPENDITURES RECONCILIATION

For the reconciliation of net capital expenditures to the most directly comparable IFRS financial measure, refer to sub-section 6.2 "Investing activities".

Capital management measures

The following financial measures used by Cogeco are capital management measures as reported in Note 16 C) of the condensed interim consolidated financial statements.

Specifiedfinancialmeasures	Usefulness	Calculation
	Net indebtedness Net indebtedness is a measure used by management, andmanagement believes it is also used by certain investors andanalysts,toassesstheCorporation'sandCogecoCommunications' financial leverage, as it represents the debt netof the available unrestricted cash and cash equivalents. Netindebtedness is a component of "Net indebtedness to adjustedEBITDA ratio".	Long-term debt before discounts, transaction costs andother;add:- Bank indebtednessdeduct:- Cash and cash equivalents, excluding cash withrestrictions on use.
Net indebtednessto adjustedEBITDA ratio	Net indebtedness to adjusted EBITDA ratio is a measure used bymanagementtoassesstheCorporation'sandCogecoCommunications' financial leverage and their capital structuredecisions, including the issuance of new debt, and to managethe Corporation's and Cogeco Communications' debt maturityrisks.	Net indebtedness divided by the twelve-month trailingadjusted EBITDA.
Adjusted EBITDAto financialexpense ratio	Adjusted EBITDA to financial expense ratio is a measure used bymanagement, and management believes it is also used by certaininvestors and analysts, to assess the Corporation's and CogecoCommunications' financial strength and the ability to servicetheir debt obligations.	Twelve-month trailing adjusted EBITDA divided byfinancial expense.
Fixed-rateindebtedness	Fixed-rate indebtedness is a measure used by management tomonitorandmanagetheCorporation'sandCogecoCommunications' capital structure. Management believes thismeasure helps investors and analysts to assess the Corporation'sand Cogeco Communications' financial leverage.	Principal on fixed-rate long-term debt divided byprincipal on long-term debt.

Supplementary financial measures

This MD&A refers to the capital intensity of Cogeco Communications, as well as of the Canadian and the American telecommunications segments, and the adjusted EBITDA margin of both segments, key performance indicators used by Cogeco Communications' management and investors, respectively, to value their performance and to assess their investment in capital expenditures in order to support a certain level of revenue.

Specified financialmeasures	Calculation
Adjusted EBITDAmargin	Adjusted EBITDA divided by revenue.
Capital intensity	Net capital expenditures divided by revenue.

15. SUPPLEMENTARY QUARTERLY FINANCIAL INFORMATION

	Fiscal 2023				Fiscal 2022			Fiscal 2021
Three months ended	November 30,2022	August 31,2022	May 31,2022	February 28,2022	(1)November 30,2021	(1)August 31,2021	(1)May 31,2021	February 28,2021
(In thousands of Canadiandollars, except per sharedata)	$	$	$	$	$	$	$	$
Operations
Revenue	789,690	746,911	754,777	748,066	745,258	655,074	649,260	653,156
Adjusted EBITDA	373,882	348,510	353,473	349,211	354,394	293,624	302,340	308,414
Acquisition, integration,restructuring and othercosts	2,677	12,657	2,286	1,451	18,635	3,961	1,272	2,330
Profit for the period	123,808	111,379	108,456	118,781	119,139	103,418	104,994	110,156
Profit for the periodattributable to owners ofthe Corporation	42,081	36,433	37,493	36,659	38,523	33,082	34,548	33,737
Cash flow
Cash flows from operatingactivities	193,821	326,636	355,681	278,768	297,342	283,538	269,078	241,619
Free cash flow	109,483	34,704	108,954	153,703	135,820	72,915	136,567	140,555
Acquisition of property,plant and equipment	235,008	244,855	198,271	158,153	146,329	180,192	126,745	115,748
Net capital expenditures	197,342	224,775	183,107	142,475	141,509	175,718	126,745	115,748
Per share data (2)
Earnings per share
Basic	2.68	2.32	2.38	2.30	2.42	2.08	2.17	2.12
Diluted	2.67	2.31	2.37	2.29	2.41	2.07	2.16	2.11
Dividends per share	0.731	0.625	0.625	0.625	0.625	0.545	0.545	0.545

(1) Comparative figures have been restated following the application of the IFRS Interpretations Committee issued agenda decision Demand Deposits with Restrictions on Use arising from a Contract with a Third Party (IAS 7 Statement of Cash Flows) during the third quarter of fiscal 2022. Furthermore, the Corporation also changed the label of its "Acquisition of property, plant and equipment" key performance indicator measure to "Net capital expenditures" following this application. For further details, refer to the "Accounting policies" section.

(2) Per multiple and subordinate voting share.

15.1 SEASONAL VARIATIONS

Cogeco's operating results are not generally subject to material seasonal fluctuations. Although, the media business faces certain seasonal variations.