Quebecor Inc. reports consolidated results for third quarter 2017

9 Nov 2017

Press Release (PDF)
Consolidated Financial Statements and Notes (PDF)
Management's Discussion and Analysis (PDF)
Supplementary Disclosure - Quebecor Inc. (PDF)

Montréal, Québec – Quebecor Inc. (“Quebecor” or the “Corporation”) today reported its consolidated financial results for the third quarter of 2017. Quebecor consolidates the financial results of its Quebecor Media Inc. (“Quebecor Media”) subsidiary, in which it holds an 81.53% interest.

Highlights

Third quarter 2017

  • Revenues: $1.03 billion in the third quarter of 2017, up $36.4 million (3.6%) from the same period of 2016.
  • Adjusted operating income: $421.1 million, up $31.3 million (8.0%).
  • Net income attributable to shareholders: $171.9 million ($1.42 per basic share) in the third quarter of 2017, compared with a net loss attributable to shareholders of $8.3 million ($0.07 per basic share) in the same period of 2016, a favourable variance of $180.2 million ($1.49 per basic share). 
  • Adjusted income from continuing operating activities: $97.2 million ($0.81 per basic share) in the third quarter of 2017, compared with $83.2 million ($0.68 per basic share) in the same period of 2016, an increase of $14.0 million ($0.13 per basic share) or 16.8%.
  • The Telecommunications segment grew its revenues by $30.0 million (3.8%) in the third quarter of 2017. Its adjusted operating income increased by $15.7 million (4.3%) despite a $5.6 million unfavourable variance in one‑time items.
  • Videotron Ltd. (“Videotron”) significantly increased its quarterly revenues from mobile telephony ($21.4 million or 16.0%), Internet access ($15.0 million or 6.1%), business solutions ($2.5 million or 8.8%) and the club illico over-the-top video service (“club illico”) ($2.3 million or 29.5%).
  • Videotron’s average monthly revenue per user (“ARPU”) was up $9.88 (6.7%) from $146.58 in the third quarter of 2016 to $156.46 in the third quarter of 2017.
  • Revenue-generating units1: Net increase of 50,400 (0.9%) in the third quarter of 2017, including 37,000 connections to the mobile telephony service, 26,900 subscriptions to the cable Internet access service and 9,800 memberships in club illico.
  • On July 24, 2017, Videotron realized a $243.1 million gain on the sale of its seven 2500 MHz and 700 MHZ wireless spectrum licences outside Québec to Shaw Communications Inc. (“Shaw”) for a $430.0 million cash consideration.
  • The Media segment grew its revenues by $9.9 million (4.5%) and its adjusted operating income by $11.3 million (32.8%) in the third quarter of 2017. 
  • Senior management changes were made at the Corporation’s segments.
    • Julie Tremblay retired as President and Chief Executive Officer of TVA Group Inc. (“TVA Group”) and President and Chief Executive Officer of Quebecor’s Media Group.
    • France Lauzière was appointed President and Chief Executive Officer of TVA Group. She also retains her responsibilities as Chief Content Officer of Quebecor Content.
    • Music, newspaper, book publishing, out of home and printing operations now report to Pierre Karl Péladeau.
    • Martin Tremblay was appointed Chief Operating Officer of Sports and Entertainment Group.

 “The Telecommunications segment’s excellent performance in the third quarter of 2017 and the significant improvement in the Media segment’s operating profits were major contributors again to the solid increase in Quebecor’s adjusted operating income and adjusted income from continuing operating activities,” commented Pierre Karl Péladeau, President and Chief Executive Officer of Quebecor. “Once again, Videotron’s numbers were propelled upwards by its high-growth products and services, including mobile telephony and Internet access. The substantial increase in revenues and operating profits in the Media segment was due to the positive impact of our programming strategy on advertising and subscription revenues in the broadcasting business, as well as the notable success of MELS Studios’ operations in the third quarter of 2017. The disposal of wireless spectrum licences in the second and third quarters of 2017 generated inflows of $614.2 million and total gains on disposal of $330.9 million. The Corporation now has access to more than $2.0 billion in available liquidity, increasing its financial manoeuvring room to invest in projects for the future.”

“During the 12-month period ended September 30, 2017, Videotron added 143,100 revenue-generating units (2.5%), including 122,600 subscriber connections to the mobile telephony service (14.1%),” noted Manon Brouillette, President and Chief Executive Officer of Videotron. “Our mobile telephony service just passed the million-connection mark. In the space of 7 years, Videotron has carved out a place for itself in the telecom industry’s big leagues. It’s an indication of the consumer receptiveness to our offering and the need for more competition in the mobile telephony market. Videotron also added 26,900 customers (1.7%) to its cable Internet access service in the third quarter of 2017, the largest quarterly increase for the service in five years. Our marketing strategy for the Fibre Hybrid 120 Internet service is still enormously successful and we remain the only telecommunications provider to offer service of that speed and power across such a large portion of Québec’s territory.”

In August 2017, Videotron reached an agreement with Comcast Corporation to develop an innovative IPTV solution for the benefit of Videotron customers, based on Comcast Corporation’s XFINITY X1 platform. “Our customers will enjoy a state-of-the-art television experience,” said Manon Brouillette. “They will be able to navigate a diverse selection of on-demand television shows, movies and concerts, as well as Web videos, apps and other content, more simply, quickly and intuitively. Videotron had already earned the title of Québec’s most respected telecommunications company for the past 12 years. On October 12, 2017, it picked up two more honours when the Ipsos‑Infopresse 2017 rankings were released: most forward-thinking and most engaging Québec brand. And, according to figures released in October 2017 by the CEFRIO research and innovation centre, 19.0% of Québec households with Internet access are subscribed to club illico, a 4-percentage-point increase from the previous year. club illico remains the largest Canadian subscription video‑on‑demand service in Québec. All these initiatives, distinctions and achievements are more evidence that Videotron is a forward‑looking company that is more in tune than ever with its customers’ needs and expectations.”

“In the Media segment, the broadcasting business and film and audiovisual services were responsible for a 32.8% increase in adjusted operating income,” observed France Lauzière, President and Chief Executive Officer of TVA Group. “The positive results for the broadcasting business were mainly driven by increased advertising revenues at TVA Network, which were up year‑over‑year for the fourth consecutive quarter, and higher subscription revenues at TVA Sports. TVA Network and the specialty channels also posted a significant increase in their total market share in the third quarter of 2017, led by the LCN all-news channel. In film production and audiovisual services, the increase in the number of film productions helped boost revenues and adjusted operating income in the third quarter of 2017. In magazine publishing, cost reductions yielded by restructuring mitigated the negative impact of the decline in revenues.”

“Thanks to its investments in lines of business with high growth and profitability potential, combined with initiatives to increase operational efficiencies and financial flexibility, the Corporation remains in an excellent position to create shareholder value,” added Pierre Karl Péladeau.

“In conclusion, I am very pleased that France Lauzière has agreed to take up the challenge of serving as President and Chief Executive Officer of TVA Group. In recent years, France and her content team have been instrumental in the success of TVA Network and the specialty channels in a difficult environment where news and entertainment sources are proliferating. I also welcome the appointment of Martin Tremblay as Chief Operating Officer of Sports and Entertainment Group. Among other things, Martin did a masterful job of representing Quebecor during the design and construction of what would become the Videotron Centre. In his new role, he will make an even greater contribution to the segment’s development and expansion. Finally, I thank Julie Tremblay from the bottom of my heart for her immense contribution over the past 25 years, for her dedication and her ability to motivate her teams for the benefit of the Corporation,” Pierre Karl Péladeau concluded.

 

1. The sum of subscriptions to the cable television, cable Internet access and Club illico services, plus subscriber connections to the cable and mobile telephony services.

 

For more details and to consult definitions of "adjusted operating income", "adjusted income from continuing operating activities" and "average monthly revenue per user", please refer to the attached PDF file for the complete version of the press release.

 

 

Information:

Jean-François Pruneau
Senior Vice President and Chief Financial Officer
Quebecor Inc. and Quebecor Media Inc.
jean-francois.pruneau@quebecor.com
514 380-4144

Hugo Delaney
Vice President, Public Affairs and Communications
Quebecor Media Inc.
hugo.delaney@quebecor.com
514 380-1808