By Luann Lasalle, The Canadian Press

MONTREAL - Bridling at what one analyst called "market chatter" that Cogeco Inc. (TSX:CCO) may retreat from the Portuguese cable industry, CEO Louis Audet said he's "not uncomfortable" with the Montreal company's first European subsidiary.

"We don't comment on rumours," Audet said on a conference call to discuss the fourth-quarter and year-end financial results for Cogeco and its primary subsidiary, Cogeceo Cable Inc. (TSX:CGA), which he also heads.

In previous discussions with reporters and analysts, Audet has said he sees the fragmented European market as a better growth opportunity than Canada, where the cable industry is dominated by a few familty-controlled companies including Cogeco, where the Audets hold sway through multiple-vote shares.

Audet acknowledged that Cogeco is paying a price to preserve its share of the Portuguese cable market against larger rivals, but said the investment will pay off in the longer term.

"Last quarter, what we said is that we thought: Portugal continued to be an interesting source of growth for the future, that it was going through a transitional phase of increased competition with which we are not uncomfortable," Audet told analysts.

"There may be short-term pain (but) we consider Portugal an important source of future growth," he said.

Cogeco has learned about how to face its competition there, he said.

"In Canada, market demand remains strong for our services," Audet added.

Cogeco reported earlier Friday that its net income rose to $15.7 million or 91 cents a share from $9.7 million or 58 cents in the year-ago period, mainly due to special items at Cogeco Cable.

Overall revenue, including a small increase at Cogeco's radio operations in Quebec, increased to $316.3 million, up eight per cent from $292.9 million, the company said.

In financial guidelines for fiscal 2010, which began Sept. 1, Cogeco maintained its revenue outlook at just under $1.3 billion but reduced its estimate for operating income before amortization by $19 million to $486 million from $505 million.

After adjusting for special items at Cogeco Cable, Cogeco Inc.'s net income would have been $8.2 million or 49 cents per share, down from $9.7 million or 58 cents in the fourth quarter of fiscal 2008.

Analysts estimates compiled by Thomson Reuters, which tend to exclude unusual items and the impact of currency fluctuation, had put Cogeco Inc.'s earnings per share at 63 cents and revenue at $317 million.

Most of the revenue increase came from Cogeco Cable, supplemented by a small increase from its radio operations.

"On the radio front, things are going extremely well," Audet said.

"Revenues have continued to grow vigorously in a shrinking market," he said, adding that has helped reduce debt at Cogeco Inc.

Audet also said the company has no immediate interest in getting into the mobile phone business, even though the CRTC has decided that new wireless player Globalive doesn't qualify to set up shop because of its heavy foreign ownership.

"We remain flexible and watchful of market needs. Our position really hasn't changed regardless of what the CRTC has decided in the case of this particular company," Audet said.

If Cogeco believes there is a "meaningful" need to offer wireless in the future, it will pick a partner that has products it can resell, he said.

The company's cable operations span parts of southern Ontario and southern Quebec, although the largest cities in those provinces are dominated by Rogers Communications Inc. (TSX:RCI.B) and Quebecor's Videotron Inc. (TSX:QBR.B).

Cogeco Cable reported separately that its net income including special items rose to $46.6 million in its fiscal fourth quarter, up from $31.9 million a year earlier.

Adjusted income was $28 million, down 12.1 per cent from $31.9 million in the fourth quarter of fiscal 2008.

Cogeco Cable's revenue increased to $307.8 million, up eight per cent from $284.9 million for the 2009 and 2008 fourth quarters ended Aug. 31.

Besides the cable company, which operates in Ontario, Quebec and Portugal, Cogeco Inc. owns and operates the Rythme FM radio stations in Montreal, Quebec City, Trois-Rivieres and Sherbrooke, as well as FM 93 in Quebec City.

Cogeco Inc. shares were down $1.10 to $24.25 in afternoon trading on the Toronto Stock Exchange, but Cogeco Cable was down $1.31 or about four per cent at $30.95.