Montréal, Québec – Quebecor Inc. (“Quebecor” or “the Corporation”) today reported its consolidated financial results for the third quarter of 2023. Quebecor consolidates the financial results of its wholly owned Quebecor Media Inc. subsidiary.
Third quarter 2023 highlights
Further to the acquisition of Freedom Mobile Inc. (“Freedom”) on April 3, 2023, Quebecor recorded revenues of $1.42 billion in the third quarter of 2023, up $271.7 million (23.8%), adjusted EBITDA of $624.4 million, up $106.4 million (20.5%), and adjusted cash flows from operations of $482.4 million, up $79.3 million (19.7%) compared with the same period of 2022.
The Telecommunications segment increased its revenues by $287.9 million (30.6%), its adjusted EBITDA by $100.0 million (20.4%), and its adjusted cash flows from operations by $72.2 million (18.9%), reflecting, among other things, the contribution of the Freedom acquisition.
The Telecommunications segment increased its revenues from mobile services and equipment (by $287.3 million or more than 100%) due to the impact of the Freedom acquisition and growth in the revenues of Videotron Ltd. (“Videotron”), and its revenues from Internet access services (by $8.2 million or 2.6%).
There was a net increase of 61,000 revenue-generating units (“RGUs”) (0.8%) in the third quarter of 2023, including 88,700 connections (2.5%) to the mobile telephony service and 4,500 subscriptions (0.3%) to Internet access services.
TVA Group Inc. (“TVA Group”) reported declines of $11.9 million (‑9.1%) in revenues and $1.7 million (‑9.4%) in adjusted EBITDA, compared with the third quarter of 2022.
The Sports and Entertainment segment increased its revenues by $2.3 million (4.0%) and its adjusted EBITDA by $2.2 million (18.0%) in the third quarter of 2023.
Quebecor’s consolidated net income attributable to shareholders: $209.3 million ($0.91 per basic share), up $30.9 million ($0.15 per basic share) or 17.3%.
The consolidated net debt leverage ratio improved from 3.52x at June 30, 2023 to 3.39x September 30, 2023.
On October 12, 2023, Quebecor announced the launch of its Mobile Virtual Network Operator (“MVNO”) service and the gradual deployment of the service territory of its Videotron, Fizz and Freedom brands in Canada, enabling them to offer their services to millions more Canadian consumers.
On September 21, 2023, Videotron announced that, according to a survey conducted by Léger between August 1 and 7, 2023, Quebecers rated Videotron as the telecommunications company with the best customer service in 2023. Twice as many respondents as its closest competitor ranked Videotron first, confirming its status as the leader in customer service.
On November 2, 2023, in the context of the worldwide crisis in the media industry, TVA Group announced major changes to its organizational structure. It will implement a reorganization plan that will refocus its mission on broadcasting, restructure its news division and optimize its real estate assets. The goal of the plan is to reduce operating costs. It will reduce the Corporation’s workforce by 547 employees, or 31% of TVA Group’s workforce.
Comments by Pierre Karl Péladeau, President and Chief Executive Officer of Quebecor:
Having firmly established ourselves as Canada’s fourth major national wireless provider, we have successfully delivered the real change we promised by bringing more competition and affordable, quality products and services to the Canadian market. In fact, according to new data released by Statistics Canada in October 2023, wireless service prices in Canada have fallen by nearly 20% since Videotron acquired Freedom in April 2023, benefiting all Canadian consumers.
Our mobile network now covers nearly 70% of Canada’s population. With the launch of our MVNO service in October 2023, we can now go even further in accessing new markets. Extending the service area of Videotron, Fizz and Freedom beyond the reach of our current facilities will enable us to gradually offer our attractive plans to millions of additional consumers across Canada, giving them more choice at better prices.
Quebecor outperformed in the third quarter of 2023, increasing revenues by 23.8%, adjusted EBITDA by 20.5% and adjusted cash flows from operations by 19.7%. Adjusted income from continuing operating activities was up 15.6%, reflecting the financial leverage effect of the acquisition of Freedom. A rigorous execution of our business plans has placed us in a strong financial position. Our operating costs are among the lowest in the Canadian telecommunications industry and we manage our capital investments with discipline, based on our strategic priorities. We were therefore able to repay more than $250 million of debt in the third quarter of 2023, reducing our consolidated net debt leverage ratio by 0.13x during the period to 3.39x at September 30, 2023, one of the lowest in the Canadian telecommunications industry.
Leveraging the Freedom acquisition, the Telecommunications segment grew its revenues by 30.6%, adjusted EBITDA by 20.4% and adjusted cash flows from operations by 18.9%. Thanks to our always disciplined management, the adjusted EBITDA margin of 47.9% remains the best in the Canadian telecoms industry. Our offering of competitively priced products with true nationwide coverage drove customer base growth, with the addition of 177,100 lines (10.4%) to our mobile telephony services and 23,300 customers (1.4%) to our Internet access services over the past 12 months.
We continue to successfully integrate Freedom’s operations, guided by our desire to offer the best products, the best service and the best prices to provide the best customer experience. We will also continue upgrading Freedom’s wireless network and rolling out 5G services across Canada, while working to introduce advantageous multiservice bundles.
TVA Group generated adjusted EBITDA of $16.5 million for the third quarter of 2023, an unfavourable variance of $1.7 million, and negative adjusted EBITDA of $11.3 million for the first nine months of 2023, an unfavourable variance of $23.0 million. During that nine‑month period, broadcasting activities generated negative adjusted EBITDA of almost $13.0 million. Even though TVA Group increased its market share by 0.5 points to 40.6% in the third quarter of 2023, advertising revenues continued their sharp decline of recent years due to factors such as the globalization of television viewing linked to the proliferation of online video streaming platforms, competition from the Web giants and unfair competition from Radio‑Canada, which is chasing ratings and advertising dollars while receiving massive government subsidies. This is not a short‑term situation but a long‑term trend that is reshaping the very fabric of the broadcasting industry. Over the past ten years and more, TVA Group has repeatedly told government bodies and regulators that urgent action is needed to allow Canada’s private media companies to operate in a modernized ecosystem that can adapt to a borderless digital world.
TVA Group’s losses are simply no longer sustainable and we have a responsibility to correct the situation. The lack of regulatory consideration for our industry, coupled with the mounting challenges it faces, has forced us to take unprecedented action. On November 2, 2023, TVA Group announced major changes to its organizational structure. It will implement a reorganization plan that will refocus its mission on broadcasting, restructure its news division, including closer collaboration with Quebecor’s other media outlets, and optimize its real estate assets. With a goal of to decrease operating costs, the plan will unfortunately result in the elimination of 547 positions, or 31% of TVA Group’s current workforce.
There is no question of TVA Group disappearing from Québec’s media and television landscape. The purpose of the reorganization plan is to position TVA Group to be able to continue offering viewers original Québec content, to continue investing, and to provide all Quebecers with reliable, high‑quality news coverage.
Quebecor has a solid foundation on which to execute its business plan. We will continue managing our business and expanding our geographic reach in a responsible, disciplined and rigorous manner. We will focus on maintaining our solid financial position, with the aim of further reducing our consolidated net debt leverage ratio, while continuing to invest strategically for the future. We are optimistic about the future and will continue to be guided by the objective of creating long‑term value for all our stakeholders.
For more details and to consult definitions of "adjusted EBITDA", "adjusted income from continuing activities", "adjusted cash flows from operations", "revenue-generating unit" and "consolidated net debt leverage ratio" 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.