Why Cogeco Cable paid $75 million for One Zone?

Why did Montreal based Cogeco Cable (TSX: CCA), the second largest cable operator in Ontario & Quebec acquire Toronto Hydro Telecom’s One Zone?

Because, it was a political and strategic move being in Ted Roger’s backyard. Political because it gave cash strapped Toronto $75 million, that the Mayor used for new public housing initiatives. Strategic because Cogeco now has the infrastructure to offer next generation DSL services, IPTV, and possibly home phone service, in addition to the existing business clientele. The New unit will be renamed Cogeco Data Services Inc.

Actually, it is a steal. Since most 30 somethings live in the downtown core, Cogeco could be their choice for DSL, home phone and IPTV service.  Roger’s probably spent over $500 million building out their cable and cellular network in Toronto over the last 40 years.  Cable valuation in the United States at the height of the mid-90s was over $5,000 per subscriber. If Cogeco get 500,000 subscribers in Toronto, the cost is $150 each, and they don’t have to do costly installations.