Montréal, Québec – Quebecor Inc. (“Quebecor” or “the Corporation”) today reported its consolidated financial results for the third quarter of 2022. Quebecor consolidates the financial results of its wholly owned Quebecor Media Inc. (“Quebecor Media”) subsidiary.
Third quarter 2022 highlights
In the third quarter of 2022, Quebecor recorded adjusted cash flows from operations of $403.1 million, a $37.3 million (10.2%) increase, consolidated adjusted EBITDA of $518.0 million, a $2.3 million (-0.4%) decrease, and revenues of $1.14 billion, a $4.5 million (-0,4%) decrease compared with the same period of 2021.
The Telecommunications segment’s adjusted cash flows from operations increased by $44.3 million (13.1%), its adjusted EBITDA by $12.7 million (2.7%), and its revenues by $2.7 million (0.3%).
Videotron Ltd. (“Videotron”) increased its revenues from mobile services and equipment by $30.7 million (12.1%) and from Internet access by $13.6 million (4.5%). The increase in Internet access revenues was due in part to the acquisition of VMedia Inc. (“VMedia”).
There was a net increase of 99,100 RGUs (1.6%) in the third quarter of 2022, including 36,300 connections (2.2%) to the mobile telephony service and 56,800 subscriptions (3.1%) to Internet access services, of which 36,400 were VMedia customers.
Consolidated net income attributable to shareholders: $178.4 million ($0.76 per basic share), an increase of $5.3 million ($0.05 per basic share).
Adjusted income from continuing operating activities: $175.0 million ($0.75 per basic share), a decrease of $1.1 million (increase of $0.02 per basic share).
On August 12, 2022, Videotron entered into a definitive agreement with Rogers Communications Inc. (“Rogers”) and Shaw Communications Inc. to acquire Freedom Mobile Inc. (“Freedom Mobile”) for $2.85 billion on a cash‑free and debt‑free basis. The agreement, which is conditional on regulatory approval, will support the expansion of the Corporation’s telecommunications services in Ontario and Western Canada, and help promote healthy competition in the interest of Canadian consumers. Videotron has obtained the required debt financing commitments for this transaction.
On October 25, 2022, Quebecor indicated its acceptance of the conditions stipulated by the Honourable François‑Philippe Champagne, Minister of Innovation, Science and Industry, for the transfer of Freedom Mobile’s spectrum licenses. Minister Champagne made his approval conditional on Videotron retaining any new licenses it acquires for a minimum of 10 years and offering prices in Ontario and Western Canada comparable to its pricing in Québec.
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 make it possible to enhance Quebecor’s offerings across Canada through advantageous bundles that will give Canadian consumers more choice at better prices.
On October 25, 2022, Event Management Gestev Inc., a subsidiary of the Sports and Entertainment Group, announced that it will be the new manager of the Théâtre du Casino du Lac‑Leamy, where it will present and promote unique, diverse programming for show audiences in the Gatineau‑Ottawa region.
On November 2, 2022, the Board of Directors of Quebecor declared a quarterly dividend of $0.30 per share on its Class A Multiple Voting Shares (“Class A Shares”) and Class B Subordinate Voting Shares (“Class B Shares”), representing an annual payout of 34%, in line with our previously announced target of 30% to 50% of our free cash flows.
Comments by Pierre Karl Péladeau, President and Chief Executive Officer of Quebecor
In the third quarter of 2022, Quebecor once again demonstrated its efficient and rigorous operational management and strong financial discipline. As a result, Quebecor increased its adjusted cash flows from operations by 10.2% to $403.1 million. Videotron turned in another excellent performance, posting a $44.3 million or 13.1% increase in adjusted cash flows from operations. Propelled by mobile services and equipment, which remain important growth drivers, and by tight management of operating expenses, Videotron’s adjusted EBITDA increased by 2.7% to $489.5 million during the quarter.
The Telecommunications segment’s Videotron and Fizz brands also continued gaining mobile market share, with more than 126,000 (8.0%) subscriber connections added in the past 12 months. Subscriptions to Internet access services increased by 70,200 (3.8%) during the same period, including 36,400 VMedia customers.
Having built close and trusting relationships with our customers over the years, we are particularly proud that Videotron picked up two more honours in recent months: a flash poll by Léger found that Videotron is the telecommunications company with the best customer service in Québec, and Videotron ranked first in several categories, including overall customer satisfaction, in the Canadian Radio‑television and Telecommunications Commission’s (“CRTC”) nation‑wide Secret Shopper Project. While we recognize that competition is beneficial for consumers and our customers, we believe that customer service is a decisive factor in choosing a telecom provider and Videotron, which has excelled on this front for more than 20 years, remains the undisputed leader in Canada.
TVA Group Inc.’s revenues and adjusted EBITDA decreased by $20.2 million and $17.3 million respectively in the third quarter of 2022, mainly because the Broadcasting segment continues to be impacted by advertising market headwinds and a regulatory environment that places us at a disadvantage against the foreign digital giants and a public broadcaster that receives more than a billion dollars per year in government subsidies, and also because of lower volumes in film production and audiovisual services. Nevertheless, to stay competitive and maintain our leading position while delivering the quality programming for which we are known, we continue to invest heavily in content for both our traditional and digital platforms. These investments are paying off and are contributing to our success, as evidenced by the 1.9‑point increase in the combined market share of TVA Network and the specialty channels to 40.1%.
Quebecor’s consolidated EBITDA decreased slightly by $2.3 million to $518.0 million in the third quarter of 2022, reflecting, among other things, these significant investments in original, high‑quality content for TVA Network and our Club illico and Vrai platforms.
We are making every effort to become the 4th major wireless and Internet service provider across Canada and deliver better prices and a robust, reliable network powered by our 5G technology to Canadian consumers. The acquisition in the third quarter of 2022 of VMedia, which has innovative solutions that complement Freedom Mobile’s operations, will also make it easier to offer service bundles and to realize the full potential of both companies across Canada. Although a mediation session on October 27, 2022 in a proceeding instituted before the Competition Tribunal did not produce a negotiated settlement, we remain committed to closing the acquisition of Freedom Mobile and confident in the soundness and merit of our plan. Building on our exemplary track record in Quebec and our proven ability to execute on our strategies in a rigorous and disciplined manner, we look forward to continued growth that will create more value for the benefit of all our stakeholders.
We also note the CRTC’s recent decision to require the incumbent telecoms Bell, Telus and Rogers to allow access to their wireless networks in order to stimulate competition and offer Canadians more choice at better prices. We plan to move forward on this quickly if the incumbents agree to negotiate in good faith and open up access to their networks, which Bell is still refusing to do.
In closing, I would like to thank Robert Paré for his dedication and important contribution throughout his eight years as a director. Robert has been a key associate and his expertise has been invaluable.
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.