Montréal, Québec – Quebecor Inc. (“Quebecor” or the “Corporation”) today reported its consolidated financial results for the fourth quarter and full year of 2022. Quebecor consolidates the financial results of its wholly owned Quebecor Media Inc. (“Quebecor Media”) subsidiary.
2022 financial year
In 2022, Quebecor recorded adjusted cash flows from operations of $1.44 billion, up $57.5 million (4.2%), adjusted EBITDA of $1.93 billion, down $38.7 million (‑2.0%), and revenues of $4.53 billion, down $22.5 million (‑0.5%) compared with 2021.
The Telecommunications segment’s adjusted cash flows from operations increased by $117.2 million (8.8%) and its adjusted EBITDA by $37.2 million (2.0%) in 2022.
Videotron Ltd. (“Videotron”) increased its revenues from mobile services and equipment ($113.6 million or 11.5%) and Internet access ($36.7 million or 3.1%) in 2022.
Videotron recorded a net increase of 125,200 (2.0%) RGUs in 2022 (including the addition of VMedia Inc.’s (“VMedia”) 57,000 RGUs at the time of its acquisition), including 108,500 (6.8%) connections to the mobile telephony service, 63,400 (3.4%) subscriptions to Internet access services (including the addition of VMedia’s 37,200 subscribers at the time of its acquisition) and 49,500 (9.8%) subscriptions to over‑the‑top (“OTT”) video services.
Adjusted income from continuing operating activities: $624.8 million ($2.66 per basic share), up $2.9 million ($0.11 per basic share).
On August 12, 2022, Videotron entered into a definitive agreement with Rogers Communications Inc. (“Rogers”) and Shaw Communications Inc. (“Shaw”) to acquire Freedom Mobile Inc. (“Freedom Mobile”) for $2.85 billion on a cash‑free and debt‑free basis. The transaction would close substantially concurrently with the closing of the acquisition of Shaw by Rogers. The acquisition of Freedom Mobile includes the Freedom Mobile brand’s entire wireless and Internet customer base, as well as its owned infrastructure, spectrum and retail outlets. It also includes a long‑term undertaking by Shaw and Rogers to provide Videotron with transport services (including backhaul and backbone) and roaming services. This transaction will support the expansion of the Corporation’s telecommunications services in Ontario and Western Canada. On December 31, 2022, the Competition Tribunal dismissed an application by the Commissioner of Competition to block the acquisition of Freedom Mobile by Videotron as well as the acquisition of Shaw by Rogers. Subsequently, on January 24, 2023, the Federal Court of Appeal dismissed the Commissioner’s appeal of the Tribunal’s decision. The acquisition of Freedom Mobile by Videotron remains, at this stage, conditional to approval by Innovation, Science and Economic Development of Canada (“ISED”), which is currently reviewing it. Rogers, Shaw and Videotron announced on February 17, 2023 that they had agreed to extend the outside date for all transactions to March 31, 2023. In anticipation of the acquisition of Freedom Mobile, Videotron has secured financing commitments from a syndicate of financial institutions for a new secured term credit facility of up to $2.40 billion comprised of three tranches maturing over 4 years.
In July 2022, Videotron acquired VMedia, an independent telecommunications provider that is well established in the Canadian market. VMedia becomes a key partner that will enhance Quebecor’s plans across Canada by supporting advantageous bundles that give Canadian consumers more choice at a better price.
On January 17, 2023, Quebecor Media redeemed at maturity its Senior Notes in aggregate principal amount of US$850.0 million, bearing interest at 5.75%, and unwound the related hedging contracts for a total cash consideration of $830.9 million. Drawings from Videotron’s secured revolving credit facility were used to finance this redemption.
On October 25, 2022, Event Management Gestev Inc., a subsidiary in the Sports and Entertainment segment, announced that it would be the new manager of the Théâtre du Casino du Lac‑Leamy. It operates the venue and presents unique, diverse programming for concertgoers in the Gatineau‑Ottawa region.
Fourth quarter 2022
In the fourth quarter of 2022, Quebecor recorded revenues of $1.19 billion, up $1.1 million (0.1%), adjusted EBITDA of $483.0 million, down $15.8 million (‑3.2%) and adjusted cash flows from operations of $359.4 million, down $11.2 million (‑3.0%) compared with the same period of 2021.
The Telecommunications segment’s adjusted EBITDA increased by $9.4 million (2.0%) and its adjusted cash flows from operations by $1.9 million in 2022.
Videotron recorded a net increase of 24,600 (0.4%) RGUs in the fourth quarter of 2022, including 34,900 (6.7%) subscriptions to OTT video services, 13,100 (0.8%) connections to the mobile telephony service and 1,300 (0.1%) subscriptions to Internet access services.
Net income attributable to shareholders: $142.5 million ($0.62 per basic share), down $18.0 million ($0.05 per basic share).
Adjusted income from continuing operating activities: $159.4 million ($0.69 per basic share), up $1.8 million ($0.03 per basic share).
Comments by Pierre Karl Péladeau, President and Chief Executive Officer of Quebecor
Faced with a highly competitive environment throughout the 2022 financial year, Quebecor maintained its operational and financial rigour while staying focused on its strategic priorities. This strong discipline enabled the Corporation to increase its adjusted cash flows from operations by 4.2% to $1.44 billion in 2022. At December 31, 2022, the Corporation had a healthy balance sheet and substantial financial resources, including net available liquidity of $1.72 billion to pursue its priorities. Videotron continued to perform well in 2022, reporting robust results in the competitive mobile telephony and Internet access services segments, which yielded an increase in adjusted cash flows from operations of $117.2 million or 8.8% to $1.46 billion and an increase in adjusted EBITDA of $37.2 million or 2.0% to $1.91 billion. Adjusted cash flows from operations and adjusted EBITDA were 39.2% and 51.4% of Videotron’s revenues respectively, by far the best performance in the Canadian telecommunications industry.
We welcomed the Federal Court of Appeal’s clear, unequivocal and unanimous decision on January 24, 2023 to dismiss the Commissioner of Competition’s appeal against the proposed acquisition of Freedom Mobile by Videotron. As ISED reviews the transaction, we reiterate our determination to attack Canada’s telecommunications oligopoly and our commitment to creating a competitive landscape that will lower the relatively high prices Canadians are still paying, as we have been doing in Québec for more than 12 years. We continue working with ISED to obtain the required approvals.
Driven by the success of the Videotron and Fizz brands, the Telecommunications segment continued to gain mobile market share, adding more than 108,500 (6.8%) subscriber connections in the past 12 months. The number of Internet access subscribers also continued to grow, with an increase of 63,400 subscribers (3.4%), including the addition of 37,200 VMedia customers. Our OTT services Club illico and Vrai continue to build on their success and now have over 552,000 subscribers. Their original, varied and regularly refreshed programming is attracting a steadily growing subscriber base, with an increase of 49,500 (9.8%) over the last 12 months.
TVA Group Inc. (“TVA Group”) generated adjusted EBITDA of $19.4 million in 2022, compared with $80.3 million in 2021. TVA Group continued to invest heavily in content, resulting in a stronger fall schedule and a 1.5-point increase in the combined market share of TVA Network and the specialty channels to 40.3%. Our major variety shows and original series continued to lead the ratings. Shows such as Chanteurs masqués, Révolution and our new daily program Indéfendable drew more than a million viewers. However, TVA Group’s 2022 results continue to reflect the decline in profitability that is affecting all of its businesses and the industry in general, in which the entity evolves. The well‑established downward trend in television audiences, due in part to multinational OTT services, combined with unfair and uneven competition from Société Radio‑Canada, which is engaging in a ratings race that is not within its mandate, are undermining Québec’s media outlets, their sustainability and our television industry’s ecosystem. Added to this is the highly prejudicial commercial treatment of all of our specialty channels by the distributor Bell TV, which continues to pay fees below the market value of our channels and to favour its own channels.
The systemic factors I have mentioned above and the current economic downturn are creating considerable uncertainty in the marketplace. Given these circumstances and the lack of regulatory and governmental intervention that has long been evident and which we have repeatedly raised with the authorities, we are compelled to take appropriate action to restore our financial position and ensure TVA Group’s sustainability. On February 16, 2023, we announced a substantial reduction in operating expenses across all of our segments, entailing the elimination of a total of approximately 240 positions at TVA Group, NumériQ, Quebecor Expertise Media and Quebecor Content, or approximately 10% of the combined workforce of the four entities. This was a difficult but necessary decision in the current environment.
Quebecor’s consolidated adjusted EBITDA decreased by 2.0% in 2022, mainly reflecting the impact of massive investments in unique premium content at TVA Network and the OTT services.
Having reached its dividend payout target of 30% to 50% of free cash flows in 2022, Quebecor’s Board of Directors has decided to maintain the dividend at its current level for the time being.
Building on our solid foundations, recognized expertise and capacity for innovation, we are more committed than ever to pursuing our ambitious cross-Canada expansion plan. Our many achievements have been made possible by our talented people. I would be remiss if I failed to mention the exceptional dedication demonstrated by all our employees throughout the year. In a sluggish economy with high inflation, we are maintaining sound management of our operations and strict financial discipline, guided by our goal of creating long-term value for our customers, employees, shareholders and communities.
For more details and to consult definitions of "adjusted EBITDA", "adjusted income from continuing activities" and "adjusted cash flows from operations" please refer to the attached PDF file for the complete version of the press release.
Chief Financial Officer
Quebecor Inc. and Quebecor Media Inc.
Quebecor Inc. and Quebecor Media Inc.