Cable Satisfaction International Inc.-Csii's 3rd Quarter Results: a Significant Improvement in the Results of Operations.

LONGUEUIL, Quebec--(BUSINESS WIRE)--Nov. 15, 1999--

(ME:CSQ.A.) (TSE:CSQ.A.) Cable Satisfaction International Inc. (Csii) is pleased to announce its consolidated financial results for the third quarter ended September 30, 1999.

Financial highlights are as follows:

Consolidated Results

The results for the third quarter ended September 30, 1999 validated Csii's development strategy. Csii crossed the 70,000 subscriber mark, with 247,376 homes passed as at September 30, 1999. Consolidated operating revenues increased by 55 % to $6.2 million in 1999, compared to $4.0 million in the similar quarter of 1998. This significant increase is attributable to the 86 % growth in basic service subscribers, which rose to 71,307 as at September 30, 1999 from 38,435 a year ago. Earnings before interest, income taxes, depreciation and amortization (EBITDA) were $626,000 in the third quarter of 1999, compared to EBITDA of $142,000 during the same period last year, an increase of 341 %. Csii recorded a net loss of $2.9 million in the third quarter of 1999 compared to $2.0 million for the same period in 1998. The higher loss, despite increased operating revenues, is the result of increases in amortization and financial expenses of $725,000 and $634,000, respectively, compared to last year. These expenses are attributable to the major expansion of Csii's telecommunications networks in Portugal and Guadeloupe.

Compared to the second quarter of 1999, third quarter results show clear improvement. Operating revenues rose to $6.2 million for the third quarter of 1999, compared to $5.5 million in the second quarter, and EBITDA grew from $399,000 for the second quarter to $626,000 in the third quarter. This 57 % increase in EBITDA is attributable to a $589,000 increase in operating revenues from our Portuguese subsidiary, which resulted in a $231,000, or 50 %, increase in its EBITDA. These results were a clear demonstration of its ability to generate higher contribution alongside subscriber growth.

Operating revenues were $17.1 million for the first nine months ended September 30, 1999 compared to $7.9 million for the same period in 1998, a 116 % increase. Close to three-quarters of this increase is attributable to strong growth in basic service subscribers. The balance of $2.5 million is due to the consolidation of WSG's results from the third quarter of 1998, compared to their proportionate consolidation in the first two quarters of 1998. EBITDA was $1.4 million for the first nine months of 1999, compared to a negative EBITDA of $401,000 in 1998, an increase of more than $1.8 million. A net loss of $7.9 million was recorded in the first nine months of 1999, compared to a net loss of $5.8 million in the previous year. This higher loss is attributable to the $2.4 million increase in depreciation and amortization during the nine-month period.

Operating Results

Guadeloupe -- Operating revenues for the third quarter were $3.6 million compared to $3.0 million for the similar period of 1998. The Guadeloupe subsidiary recorded EBITDA of $1.3 million, compared to $898,000 during the same period last year, an increase of 45 %. For the first nine months ended September 30, 1999 operating revenues and EBITDA totalled $10.9 million and $3.7 million, respectively, compared to $5.5 million and $1.8 million, respectively, in 1998. These translate into increases of 98 % and 106%, respectively. Subscriber growth accounted for more than 54 % of the increase, with the balance attributable to the consolidation of WSG results.

Portugal -- Continued subscriber growth contributed to a significant improvement in the operating results of the Portuguese subsidiary. The number of homes passed rose to 179,802 at the end of the third quarter of 1999 from 88,514 as at September 30, 1998, a 103 % increase. The number of basic service subscribers increased by 158 % to 43,935 as at September 30, 1999, compared to 17,007 as at September 30, 1998. More than 6,000 homes were subscribed to pay-TV services for a penetration rate of 14 %, compared to no subscribers last year. The penetration rate for basic service increased to 24.4 % as at September 30, 1999, compared to 19.0 % last year, an increase of 28.4 %. This increase resulted in a 150 % increase in operating revenues, which rose to $2.5 million for the third quarter of this year from $1.0 million for the third quarter of 1998. Operating revenues increased more than 30 % compared to the second quarter. A loss before interest, income taxes, depreciation and amortization of $231,000 was recorded during the third quarter of 1999, compared to a loss of $462,000 for the previous quarter. An EBITDA loss of $222,000 was recorded in the third quarter of 1998. Operating revenues for the first nine months ended September 30, 1999 increased 174 % to $6.3 million from $2.3 million in 1998. The loss before interest, income taxes, depreciation and amortization rose to $1,095,000 in 1999 from $694,000 in 1998. The decreased loss between the second and third quarter of 1999 is attributable to subscriber growth and stable operating expenses. The opening of several regional offices during the last few quarters contributed significantly to consistent subscriber growth.

Other Developments

Other important developments occurred near the close of the third quarter. On September 29, 1999, Csii's wholly-owned subsidiary, 2-Way Communications Limited (2-Way), signed a final contract with Valvision Telecommunications B.V. for the sale of Csii's subsidiary, World Satellite Guadeloupe S.A. (WSG). The transaction was valued at $71 million. Csii will receive net proceeds from disposal of more than $36 million for its 55 % stake in WSG. 2-Way will record a gain of approximately $25 million on the disposal of its interest in WSG.

On October 1, 1999, Capital Communications CDPQ inc. invested $31,875,000 in a private placement of 8,500,000 subordinate voting shares of the Company, at a price of $3.75 per share. On October 14, 1999, a group of underwriters purchased 5,300,000 subordinate voting shares, at a price of $3.75 per share, for net proceeds of $19,875,000. The underwriting group is comprised of CIBC World Markets Inc., lead underwriter, and Canaccord Capital Corporation, Nesbitt Burns and National Bank Financial Corp. The net proceeds from these share issues will mainly be used to finance large-bandwidth network expansion in Portugal, fibre optic backbone network deployment across Portugal, launch of high-speed Internet access services, and development of IP-protocol telephony services in Portugal. Csii also listed on the Toronto Stock Exchange on October 14, 1999. As planned, the high speed Internet access services were launched in Portugal in November 1999.

Csii is a Canadian cable operator that builds and operates hybrid fibre optic and coaxial broadband networks in the international cable television and telecommunications markets through its subsidiaries. The subordinate voting shares of Csii are listed on the Montreal Exchange and on the Toronto Stock Exchange under the ticker symbol csq.a.