Montréal, Québec – Quebecor Inc. (“Quebecor” or the “Corporation”) today reported its consolidated financial results for the fourth quarter and full year of 2018. Quebecor consolidates the financial results of Quebecor Media Inc. (“Quebecor Media”), a wholly owned subsidiary since June 22, 2018.
 

Highlights
 

2018 financial year and recent developments

• Revenues: $4.18 billion, up $55.9 million (1.4%) from 2017.
• Adjusted EBITDA $1.73 billion, up $114.9 million (7.1%).
• Net income attributable to shareholders: $401.5 million ($1.68 per basic share) in 2018, compared with $390.5 million ($1.61 per basic share) in 2017, an increase of $11.0 million ($0.07 per basic share).
• Adjusted income from continuing operating activities: $468.1 million ($1.96 per basic share) in 2018, compared with $347.9 million ($1.44 per basic share) in 2017, an increase of $120.2 million ($0.52 per basic share) or 34.6%.
• The Telecommunications segment grew its revenues by $94.2 million (2.9%) and its adjusted EBITDA by $119.2 million (7.7%) in 2018.
• Videotron Ltd. (“Videotron”) significantly increased its revenues from mobile telephony ($64.6 million or 13.8%), Internet access ($48.4 million or 4.7%) and the Club illico over‑the‑top video service (“Club illico”) ($7.3 million or 18.4%) in 2018. 
• Videotron’s total average billing per unit (“ABPU”) was $49.51 in 2018, compared with $48.23 in 2017, a $1.28 (2.7%) increase. Mobile ABPU was up $0.39 (0.7%) to $53.62 in 2018 compared with $53.23 in 2017.
• There was a net increase of 109,200 revenue generating units (“RGU”) (1.9%) in 2018, including 129,800 connections to the mobile telephony service (12.7%), 38,000 subscriptions to the cable Internet access service (2.3%) and 59,200 memberships in Club illico (16.4%).
• Videotron sold its 4Degrees Colocation Inc. (“4Degrees Colocation”) data centre operations on January 24, 2019 for $261.6 million paid in cash, subject to certain future conditions, resulting in an estimated gain on disposal of $118.0 million, which will be recognized in the first quarter of 2019, while an amount of $53.0 million will be deferred in connection with the estimated present value of the future conditional adjustments.
• On May 11 and June 22, 2018, Quebecor Media repurchased a total of 16,064,215 of its Common Shares held by CDP Capital d’Amérique Investissements inc. (“CDP Capital”), a subsidiary of the Caisse de dépôt et placement du Québec, for a total aggregate purchase price of $1.54 billion, paid in cash. On June 22, 2018, Quebecor purchased 1,564,696 Common Shares of Quebecor Media held by CDP Capital in consideration of the issuance of a convertible debenture in the principal amount of $150.0 million, convertible into Class B Subordinate Voting Shares (“Class B Shares”) of Quebecor. Upon completion of these transactions, the Corporation’s interest in Quebecor Media increased from 81.53% to 100.0%.
• In the first quarter of 2018, the Corporation increased its quarterly dividend on its Class A Multiple Voting Shares (“Class A Shares”) and Class B Shares by 100% from $0.0275 to $0.055 per share.
• On January 7, 2019, the Corporation announced the following senior management changes: 
  • Mr. Jean‑François Pruneau, previously Senior Vice President and Chief Financial Officer of Quebecor and Quebecor Media, was appointed President and Chief Executive Officer of Videotron, succeeding Ms. Manon Brouillette, whose name was submitted to the Corporation’s Human Resources Committee and Corporate Governance Committee at the beginning of 2019 for appointment to the Board of Directors of Quebecor. On the same day, Mr. Hugues Simard was appointed Chief Financial Officer of Quebecor and Quebecor Media.
  • Mr. Marc M. Tremblay was appointed Chief Operating Officer, Chief Legal Officer and Corporate Secretary of Quebecor and Quebecor Media. Mr. Tremblay was previously Senior Vice President, Chief Legal Officer and Public Affairs, and Corporate Secretary of Quebecor and Quebecor Media.
     

Fourth quarter 2018

• Revenues: $1.09 billion, a $27.6 million (2.6%) increase.
• Adjusted EBITDA: $450.0 million, a $32.0 million (7.7%) increase.
• Net income attributable to shareholders: $116.8 million ($0.46 per basic share) in the fourth quarter of 2018, compared with $70.4 million ($0.29 per basic share) in the same period of 2017, a favourable variance of $46.4 million ($0.17 per basic share).
• Adjusted income from continuing operating activities: $132.7 million ($0.52 per basic share) in the fourth quarter of 2018, compared with $83.3 million ($0.35 per basic share) in the same period of 2017, an increase of $49.4 million ($0.17 per basic share) or 59.3%.
• There was a net increase of 34,400 RGUs (0.6%) in the fourth quarter of 2018, including 33,100 connections (3.0%) to the mobile telephony service, 7,000 subscriptions to the cable Internet access service (0.4%) and 17,900 memberships in Club illico (4.4%).
   

Our positive results in the fourth quarter of 2018 cap what was an excellent year in many respects, driven once again by Videotron’s strong numbers. Quebecor also achieved a major milestone in its history in 2018 by completing the repurchase of all the shares of its Quebecor Media subsidiary held by CDP Capital, its leading financial partner since the acquisition of Groupe Vidéotron ltée in 2000. With this share repurchase, we now have access to all the cash flows generated by Quebecor Media, giving us full control over our assets, our development and our future. The financial leverage obtained by this share repurchase, combined with our increased profitability, are fully reflected in the 59.3% increase in our adjusted income from continuing operating activities in the fourth quarter of 2018.

With respect to innovation and development, we are well positioned to benefit from the latest technological advances in order to take on competition on all fronts. Among other things, in late 2018, we launched Fizz, our new advantageously priced, fully digital cellphone service, which will enable us to reach an entirely new market. We are also planning a large‑scale roll‑out in 2019 of our Helix platform, based on our partner Comcast Corporation’s Xfinity X1 platform, which will let our customers take advantage of convergence among all the technologies they use in their home, as well as access aggregation and recommendation tools for rich content from both conventional and over‑the‑top broadcasting platforms.
 

In our Media segment, we pressed ahead with our strategy to diversify our revenue streams and enhance our content offerings. To this end, we made a number of acquisitions in 2018 and early 2019, including the companies in the Incendo Media Inc. group (“Incendo Media”), the Serdy Media inc. and Serdy Vidéo inc. groups, Audio Zone Inc., LC Media Inc., and the assets of Mobilimage inc. In addition, we launched QUB radio, our new online and mobile app audio platform, Mr. Péladeau added.
 

In 2018, the results of the mobile telephony, Internet access and Club illico services continued their strong uptrend and remained growth drivers in which we continue to invest, said Jean‑François Pruneau, President and Chief Executive Officer of Videotron. Subscriptions to the mobile telephony service increased by 12.7%, to Internet access by 2.3%, and to Club illico by 16.4%, highlighting once again the quality and diversity of the services Videotron offers its customers. We are very proud of the substantial increase in the subscriber base for the mobile version of Club illico since its launch in the fall of 2018. By December 31, 2018 it stood at more than 127,000 customers, which is consistent with consumer trends, as viewers increasingly turn to digital platforms to access content. Our efforts to expand our customer base and reach new geographic regions, combined with our effective targeting of customer needs, have been instrumental in our success.
 

Videotron also owes its success in large part to the engaged and talented employees who deliver excellent customer experience day after day. We are therefore pleased to report that Videotron ranked as one of Montréal’s Top Employers on Mediacorp Canada’s 2019 list, after being named one of Canada’s Top 100 Employers in November 2018, Mr. Pruneau said.
 

The Media segment’s adjusted EBITDA increased by $5.1 million (22.8%) in the fourth quarter of 2018, with a 9.0% increase for TVA Group Inc. (“TVA Group”).
 

All our business segments contributed to the significant increase in TVA Group’s profitability in the fourth quarter of 2018, said France Lauzière, President and Chief Executive Officer of TVA Group. The various cost‑cutting initiatives implemented in recent quarters offset the impact of the decrease in broadcasting and magazine advertising revenues. In the Film Production & Audiovisual Services segment, soundstage and equipment rentals and postproduction revenues contributed to the increase in adjusted EBITDA.
 

In the fourth quarter of 2018, TVA Group’s market share continued to grow to 36.6 %. The specialty channels increased their market share by 1.4 points to 13.5%. LCN, by far Québec’s most‑watched specialty channel, increased its market share by 0.5 points.
 

We were very pleased to close the acquisition of the Évasion and Zeste specialty channels on February 13, 2019. They will enhance our television content offerings to the benefit of our viewers and advertisers. We also reached an agreement on February 22, 2019 to acquire the companies in the Incendo Media group, a producer and distributor of television products for international markets. The transaction is in keeping with our push to increase our revenues from other markets, step up our international development and expand our footprint, especially in English‑language markets. concluded France Lauzière.
 

In the Sports and Entertainment segment, the Videotron Centre completed its third year of operation in September 2018. During that year, the Videotron Centre hosted 91 sporting events and concerts, an 8.3% increase from the previous year. In April 2018, Billboard magazine ranked the Videotron Centre number 5 on its list of top Canadian arenas, based on concert receipts.
 

In 2018, Quebecor redeemed, for cash, convertible debentures in the aggregate principal amount of $87.5 million and redeemed the entirety of its remaining convertible debentures, with a book value of $784.8 million at the redemption date, in consideration of the issuance of 30,129,869 Class B Shares, said Hugues Simard, Chief Financial Officer of Quebecor. The Corporation also purchased and cancelled 11,390,300 Class B Shares under its normal course issuer bid in 2018 for a cash consideration of $291.7 million. Since the inception of its normal course issuer bid, the Corporation has purchased a total of 31,091,200 Class B Shares for a total cash consideration of $570.8 million. The Corporation has therefore been able to capitalize on its growth to limit the dilutive impact on shareholders of the financial operations it conducted for the purpose of repurchasing the shares of Quebecor Media.
 

In 2018, we again demonstrated our ability to implement positive strategies while staying focused on executing our business plan and managing our operations, Pierre Karl Péladeau concluded. In a time of far‑reaching change, we are looking to the future and to solid profitability based on structured growth, to the benefit of our customers, our employees and our shareholders.

 

 

 

 

Information :

Hugues Simard
Chief Financial Officer
Quebecor Inc. and Quebecor Media Inc.
hugues.simard@quebecor.com
514 380-7414
 

Communications department
Quebecor Inc. and Quebecor Media Inc.
medias@quebecor.com
514 380-4572