Montréal, Québec – Quebecor Inc. (“Quebecor” or the “Corporation”) today reported its fourth quarter and full year 2016 consolidated financial results. Quebecor consolidates the financial results of its Quebecor Media Inc. (“Quebecor Media”) subsidiary, in which it holds an 81.1% interest.
2016 financial year and recent developments
- Revenues: $4.02 billion, up $125.8 million (3.2%) from 2015.
- Adjusted operating income: $1.49 billion, up $53.4 million (3.7%).
- Net income attributable to shareholders: $194.7 million ($1.59 per basic share) in 2016, compared with $151.8 million ($1.24 per basic share) in 2015, an increase of $42.9 million ($0.35 per basic share).
- Adjusted income from continuing operating activities: $305.5 million ($2.49 per basic share) in 2016, compared with $239.9 million ($1.95 per basic share) in 2015, an increase of $65.6 million ($0.54 per basic share) or 27.3%.
- The Telecommunications segment grew its revenues by $144.8 million (4.8%) and its adjusted operating income by $63.6 million (4.6%) in 2016.
- Videotron Ltd. (“Videotron”) significantly increased its revenues from mobile telephony (by $106.7 million or 26.4%), Internet access ($58.0 million or 6.3%), Videotron Business Solutions ($42.1 million or 60.9%) and the Club illico over‑the top video service (“Club illico”) ($7.8 million or 33.1%) in 2016.
- Videotron’s average monthly revenue per user (“ARPU”) was up $9.18 (6.8%) from $135.68 in 2015 to $144.86 in 2016.
- Revenue-generating units:1 117,900 (2.1%) net increase in 2016, including 125,300 connections to the mobile telephony service, 44,600 subscriptions to the cable Internet access service and 57,200 memberships in Club illico.
- On February 16, 2017, Pierre Karl Péladeau returned to the position of President and Chief Executive Officer of Quebecor and Quebecor Media, replacing Pierre Dion who was appointed Chairman of the Board of Quebecor Media and a director of Quebecor.
- On January 10, 2017, TVA Sports became the exclusive French-language broadcaster of the Montréal Impact and an official broadcaster of Major League Soccer (“MLS”) for the next five years.
- On November 15, 2016, Videotron began deploying Docsis 3.1 technology on its network; it will deliver download speeds of up to 10 Gbps and upload speeds of up to 1 Gbps.
- On October 24, 2016, TVA Group Inc. (“TVA Group”) announced the launch of its TVA.ca website and the TVA mobile app.
- On September 13, 2016, 4Degrees Colocation Inc. (“4Degrees Colocation”), a subsidiary of Videotron, officially opened its Montréal data centre, a $40.0‑million facility purpose-designed for data hosting.
- In the first quarter of 2016, the Corporation increased its quarterly dividend on Class A Multiple Voting Shares (“Class A Shares”) and Class B Subordinate Voting Shares (“Class B Shares”) by 28.6%, from $0.035 to $0.045 per share.
Fourth quarter 2016
- Revenues: $1.05 billion, up $26.9 million (2.6%).
- Adjusted operating income: $389.3 million, up $28.5 million (7.9%).
- Net income attributable to shareholders: $123.3 million ($1.01 per basic share) in the fourth quarter of 2016, compared with a net loss attributable to shareholders of $34.8 million ($0.28 per basic share) in the same period of 2015, a favourable variance of $158.1 million ($1.29 per basic share), including the $130.8 million favourable impact of fluctuations in the fair value of convertible debentures.
- Adjusted income from continuing operating activities: $84.7 million ($0.69 per basic share) in the fourth quarter of 2016, compared with $58.0 million ($0.47 per basic share) in the same period of 2015, an increase of $26.7 million ($0.22 per basic share) or 46.0%.
- Revenue-generating units: 62,300 net increase in the fourth quarter of 2016, including 26,200 connections to the mobile telephony service, 16,700 subscriptions to the cable Internet access service and 36,200 memberships in Club illico.
- Videotron’s ARPU: $148.56 in the fourth quarter of 2016 compared with $140.19 in the same period of 2015, an $8.37 (6.0%) increase.
I am pleased to be back at the helm of Quebecor, a corporation in excellent financial health that has experienced steady growth in recent years,” said Pierre Karl Péladeau, President and Chief Executive Officer of Quebecor. “I plan to continue the work of my predecessor, Pierre Dion, with the support of the solid management team, in order to pursue the development of the Corporation and its businesses. We will press ahead with our business strategy, relying on the same growth drivers that have propelled the Corporation’s success thus far.
In 2016, Quebecor grew its revenues by 3.2% and its adjusted operating income by 3.7%, Pierre Karl Péladeau noted.
Once again, the Telecommunications segment was responsible for the increases. The enthusiastic customer response to Videotron’s offerings continues. The subscriber base for Videotron’s mobile service passed the 900,000 mark at the beginning of 2017, solidifying Videotron’s positioning as a mobile telephony leader in Québec. The 27.3% increase in adjusted income from continuing operating activities of Quebecor in 2016, which fully reflects the growth in the Corporation’s operating results and the positive impact of the financial transactions carried out over the past two years, was also noteworthy. Quebecor also posted excellent fourth quarter 2016 results, with a 7.9% increase in adjusted operating income generated by improved profitability in each of its segments, and a 46.0% increase in adjusted income from continuing operating activities.
We are satisfied with the results Videotron recorded in 2016 and confident that the opportunities created by long‑term trends in the wireless industry will support continuing sustained growth in our mobile telephony services, said Manon Brouillette, President and Chief Executive Officer of Videotron. “We will maintain a disciplined approach to balancing the pursuit of subscriber growth with control over customer acquisition costs in order to maximize the profitability of the mobile service. Mobile telephony contributed strongly to the 117,900 increase in Videotron’s revenue-generating units in 2016 and the $9.18 (6.8%) increase in ARPU. The mobile service’s ARPU rose $3.31 (6.9%) from $47.92 in 2015 to $51.23 in 2016.
At the same time, the development of our Internet access services and our business services also made a positive contribution to the robust numbers, added Manon Brouillette. “Our Fibre Hybrid 120 and Fibre Hybrid 200 Internet service marketing strategy has been a resounding success; Videotron is the only telecommunications provider to offer services of such speed and power on such a large portion of Québec’s territory. In July 2016, Videotron also launched Fibre Hybrid Giga Internet access service and in November 2016 it started rolling out Docsis 3.1 technology, which will eventually support download speeds of up to 10 Gbps. All these initiatives strengthen Videotron’s lead in high-speed Internet access for residential and business customers. In the Business Solutions segment, following the acquisition of Fibrenoire inc. in January 2016, we stepped up investment in our data centres and in September 2016 we opened a new Montréal data centre which boasts one of the largest server rooms in Québec. I should also mention that 4Degrees Colocation data centres have obtained ISO 27001 certification, one of the most respected international standards.”
According to a survey conducted by the independent research firm Forrester released in late 2016, Videotron provides the best customer experience of all cable TV, Internet and wireless service providers in Canada. Videotron’s mobile service earned the ultimate accolade: best customer experience overall among the 193 Canadian brands ranked on Forrester’s Customer Experience Index in 2016.
We have always been guided by our desire to push the customer experience envelope and we are very proud of these distinctions, which we owe to the unflagging commitment of our 6,500 employees, said Manon Brouillette.
The Media segment increased its adjusted operating income by $2.4 million (10.8%) in the fourth quarter of 2016; adjusted operating income from broadcasting operations was up $4.7 million (37.0%), Julie Tremblay, President and Chief Executive Officer of Media Group, commented. “The performance was due to the impact of higher advertising revenues at TVA Network and the TVA Sports channel, higher subscription revenues at the specialty channels, and cost reductions related to restructuring initiatives.
“The disruption affecting the media industry in Québec, as in the rest of the world, has led us to take transformative initiatives in order to adapt to the changes. To address the constantly shifting environment, the Media segment announced organizational changes on November 2, 2016 to balance its costs and enhance operational efficiencies. The workforce was reduced by 220 positions, mainly managers, professionals and administrative support staff, to enable the Media segment to maintain its lead in news and content production and promote its flagship brands.
On the business development front, we are very proud of the agreement making TVA Sports the exclusive French-language broadcaster of the Montréal Impact and an official broadcaster of the MLS for the next five years. This partnership will make it possible to enrich TVA Sports’ programming with new content and disseminate it on all of Quebecor’s media platforms. Also in 2016, the Media segment launched its new TVA.ca website and TVA mobile app as part of TVA Group’s strategy to enlarge its footprint in new media and in Internet broadcasting channels in order to reach its target audiences more effectively, Julie Tremblay concluded.
In the Sports and Entertainment segment, the Videotron Centre completed its first full year of operation in September 2016. The venue offered guests an extensive and varied schedule of concerts and sporting events, which it is constantly enriching and expanding. Meanwhile, in April 2016, Gestev became the official imprint for all shows and events produced and/or presented by Quebecor, enhancing the total package offered by the Corporation.
Quebecor thus posted strong consolidated financial results in 2016 while implementing its business plan focused on high‑growth activities, commented Pierre Karl Péladeau. The Corporation remains well positioned to achieve its profitability and shareholder value‑maximization objectives.
In conclusion, I would like to express my gratitude and appreciation to Pierre Dion for his exemplary leadership and inspired work. He has occupied senior management positions with Quebecor and its subsidiaries since 2004. He has been one of the Corporation’s most loyal officers and he will continue playing an active, strategic role in its affairs in his new role.
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.
Senior Vice President and Chief Financial Officer
Quebecor Inc. and Quebecor Media Inc.
Vice President, Public Affairs
Quebecor Media Inc.