Quebecor Inc. reports consolidated results for first quarter 2023
Montréal, Québec – Quebecor Inc. (“Quebecor” or “the Corporation”) today reported its consolidated financial results for the first quarter of 2023. Quebecor consolidates the financial results of its wholly owned Quebecor Media Inc. (“Quebecor Media”) subsidiary.
First quarter 2023 highlights
In the first quarter of 2023, Quebecor recorded adjusted cash flows from operations of $346.0 million, up $29.9 million (9.5%), revenues of $1.12 billion, up $27.6 million (2.5%), and adjusted EBITDA of $442.8 million, up $0.7 million (0.2%) compared with the same period in 2022.
The Telecommunications segment’s adjusted cash flows from operations increased by $34.9 million (10.1%), its revenues by $21.6 million (2.4%) and its adjusted EBITDA by $14.2 million (3.1%).
Videotron Ltd. (“Videotron”) increased its revenues from mobile services and equipment ($25.1 million or 10.0%) and Internet access services ($16.1 million or 5.4%) in the first quarter of 2023.
There was a net increase of 4,100 (0.1%) RGUs in the first quarter of 2023, including 26,200 (1.5%) connections to the mobile telephony service and 8,800 (0.5%) subscriptions to Internet access services.
The revenues of TVA Group Inc. (“TVA Group”) were down $8.4 million and its adjusted EBITDA was negative $24.0 million, an unfavourable variance of $14.3 million compared with the first quarter of 2022.
The Sports and Entertainment segment’s revenues increased by $14.4 million (42.2%) and there was a $3.5 million favourable variance in its adjusted EBITDA in the first quarter of 2023.
Quebecor’s net income attributable to shareholders: $120.9 million ($0.52 per basic share), a decrease of $0.5 million (increase of $0.01 per basic share).
Adjusted income from continuing operating activities: $136.0 million ($0.59 per basic share), an increase of $7.3 million ($0.05 per basic share) or 5.7%.
On April 3, 2023, Videotron acquired Freedom Mobile Inc. (“Freedom”) from Shaw Communications Inc. (“Shaw”) for a purchase price of $2.85 billion. Videotron paid $2.17 billion in cash and assumed certain debts, mainly lease obligations. The consideration paid is subject to certain post‑closing adjustments. The acquisition 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 commitment by Shaw and Rogers Communications Inc. to provide Videotron with transport services (including backhaul and backbone), roaming services and wholesale Internet services. These transactions will support the expansion of the Corporation’s telecommunications services in Ontario and Western Canada.
On April 3, 2023, Videotron entered into a new $2.10 billion secured term credit facility with a syndicate of financial institutions to finance the acquisition of Freedom. The term credit facility consists of three tranches of equal size maturing in October 2024, April 2026 and April 2027, bearing interest at floating rates. On April 10, 2023, Videotron entered into a floating‑to‑fixed interest rate swap in relation with the $700.0 million tranche maturing in April 2027, fixing the interest rate at 5.203%, based on Videotron’s current leverage ratio.
Consolidated net debt leverage ratio was down 0.1 point to 3.1x, lower than that of Canada’s Big 3 telecoms.
On January 26, 2023, Quebecor announced a $9.9 million investment by Videotron in the acquisition of spectrum licences in the 600 MHz band in Manitoba and in the 3500 MHz band in Québec. The spectrum was acquired in the auction of residual spectrum licences that concluded on January 25, 2023.
Comments by Pierre Karl Péladeau, President and Chief Executive Officer of Quebecor
We are very pleased to have completed the acquisition of Freedom in April 2023, creating the fourth major national wireless carrier that Canadian consumers have been waiting for. Together, Freedom and Videotron have more than 3.5 million mobile subscriber connections, nearly 7,500 employees, and extensive network coverage in Québec, Ontario, Alberta and British Columbia. Videotron’s expansion across Canada will transform the Canadian wireless market for the benefit of all consumers, who will have access to innovative products and services at better prices, in a healthy competitive environment. With the recent acquisition of independent telecommunications service provider VMedia Inc. (“VMedia”), we will also soon be able to offer very attractive multi‑service bundles, including not only wireless but also Internet and television.
Building on Videotron’s success in Québec, we will now focus on upgrading our infrastructure and growing the customer base for our various services across Canada, while managing our capital in a disciplined and efficient manner. That said, while we applaud the courage of the federal government and the CRTC in allowing Videotron to become the fourth national player, much work remains to be done on national public policy, including setting reasonable wholesale rates for mobile virtual network operators (MVNOs), roaming and fibre to the premises (FTTP).
Quebecor performed strongly in the first quarter of 2023, as reflected in adjusted cash flows from operations of $346.0 million, up 9.5% from the same period of 2022. The Corporation’s revenues and adjusted EBITDA also increased by 2.5% and 0.2% respectively. The Telecommunications segment was a significant contributor to these strong results, as evidenced by the $34.9 million (10.1%) increase in cash flows from operations to $379.5 million and the $14.2 million (3.1%) increase in adjusted EBITDA to $474.2 million. With $1.51 billion in available liquidity as of March 31, 2023, Quebecor is well positioned to leverage its excellent financial position to execute its cross-Canada growth plan.
Videotron’s flagship services continued to attract more customers over the past 12 months, with the addition of 110,200 mobile subscriber connections, a 6.8% increase, and 75,300 Internet access subscribers, including 37,200 VMedia customers, a 4.7% increase.
I am also very proud of the distinctions Videotron has earned since the beginning of 2023. Videotron was ranked the most respected telecommunications company in Québec for the 17th time since 2006 in the 2023 Léger reputation survey released on April 5, 2023. And for the fourth year in a row, Fizz placed first for online experience in Canada’s telecommunications industry on Léger’s WOW Digital Index.
In a fiercely competitive environment, TVA Group Inc. (“TVA Group”) continued to invest in quality content, which impacted its profitability in the first quarter of 2023, resulting in an unfavourable variance of $14.3 million in its adjusted EBITDA. TVA Group’s financial results were also affected by the absence of foreign blockbusters in the film production and audiovisual services segment.
The cost reduction measures stemming from the restructuring plan announced in February 2023 and advertising revenue growth in the first quarter of 2023 driven by the TVA+ platform, which increased its digital video‑on‑demand views and revenues by 30% and 33% respectively, were insufficient to counteract current market conditions and support the level of investment TVA Group must make in order to be competitive. We are forced to compete on an uneven playing field against the web giants and CBC / Radio‑Canada, which is heavily subsidized by the state. However, our strategy of boosting our spending on content is increasing the market share of both TVA Network and our specialty channels, which reached a combined 40.9% at the end of the first quarter of 2023. TVA Network had four of the top five shows in Québec during the quarter.
Quebecor began 2023 on a strong note with excellent financial results that provide a solid foundation on which to build the expansion of our telecommunications services. Our arrival as the fourth national player ushers in an era of healthy competition in the country’s wireless market for the benefit of Canadians and announces a new phase of growth for Quebecor. Quebecor has what it takes to be a leader in Canada, and we will implement our strategies with rigour and discipline to continue creating sustainable value for all our stakeholders.
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.