Montréal, Québec – Quebecor Inc. (“Quebecor” or the “Corporation”) today reported consolidated financial results for the second quarter of 2015. Quebecor consolidates the financial results of its Quebecor Media Inc. (“Quebecor Media”) subsidiary, in which it holds a 75.4% interest.
Second quarter 2015
- Revenues: $960.9 million, up $67.9 million (7.6%) compared with the second quarter of 2014.
- Adjusted operating income: $349.3 million, down $10.6 million (-2.9%).
- Net income attributable to shareholders: $72.1 million ($0.59 per basic share) compared with a net loss attributable to shareholders of $54.8 million ($0.45 per basic share) in the same period of 2014, a favourable variance of $126.9 million ($1.04 per basic share) reflecting in part a $98.7 million improvement in the loss from discontinued operations.
- Adjusted income from continuing operations: $66.5 million ($0.54 per basic share) compared with $55.9 million ($0.45 per basic share) in the same period of 2014, an increase of $10.6 million ($0.09 per basic share).
- Telecommunications segment: revenues up $43.9 million (6.3%) and adjusted operating income up $10.2 million (3.1%). Videotron Ltd. (“Videotron”) posts $29.5 million (44.2%) increase in revenues from mobile telephony, $14.1 million (6.6%) increase in revenues from Internet access services, and more than doubles revenues from the Club illico over-the-top video service ($3.2 million increase).
- Videotron average monthly revenue per user (“ARPU”): $133.71 in the second quarter of 2015 compared with $123.61 in the same period of 2014, a $10.10 (8.2%) increase led by a $5.69 (13.8%) increase in mobile telephony revenues.
- Revenue-generating units: net increase of 12,900 units during the quarter; year-to-date net increase of 225,200 units (4.3%), including increases of 150,600 subscriber connections to the mobile telephone service and 98,600 subscriptions to the over-the-top video service.
- On July 20, 2015, Quebecor officially filed an application for a professional hockey franchise in Québec City under the National Hockey League (“NHL”) expansion process.
- On May 19, 2015, Quebecor announced the sale of the retail operations of Archambault Group Inc. (“Archambault Group”) to Renaud‑Bray. The transaction includes the 14 Archambault stores, the archambault.ca website, and the English‑language Paragraphe Bookstore. The transaction is subject to Competition Bureau approval.
- On May 12, 2015, after the closing of Industry Canada’s auction for 2500 MHz commercial mobile spectrum, Quebecor Media announced that its Videotron subsidiary was the successful bidder for 18 licences covering all of Québec as well as the major urban centres in the rest of Canada, including Toronto, Ottawa, Calgary, Edmonton and Vancouver. The licences were acquired at a total cost of $187.0 million.
Quebecor’s revenues grew by $67.9 million or 7.6% in the second quarter of 2015, mainly because of the Telecommunications segment’s performance,” said Pierre Dion, President and CEO of Quebecor. “Consumers continue to respond positively to the quality of the segment’s offerings. For example, subscriber connections to the mobile network jumped 40,800 (6.2%) in the second quarter, pushing the total over the 700,000 mark. Quebecor’s adjusted operating income was down 2.9% to $349.3 million, reflecting major investments required for the pursuit of our business plan, including the development of the TVA Sports specialty channel and our new venue management activities at the Videotron Centre in Québec City. Adjusted income from continuing operations was up $10.6 million or 19.0% in the second quarter of 2015.
“When it comes to development initiatives, Quebecor submitted an application to the NHL on July 20, 2015 to bring a professional hockey team to Québec City and move it into a home built specifically for this purpose, the Videotron Centre. Our ultimate objective is to make sports a major growth driver for Quebecor, a value-added content offering that draws our customers to live events which bring people together. All our actions over the past few years converge toward this goal, among them launching TVA Sports in 2011, making TVA Sports the NHL’s official French-language broadcaster until 2026, signing an agreement with Québec City to manage the Videotron Centre for the next 25 years and acquiring two Quebec Major Junior Hockey League teams. We also plan to share our passion for sports by launching a process to bring partners on board with our efforts to land a professional hockey franchise.
“With respect to investments in mobile telephony, in May 2015, Quebecor acquired eighteen 2500 MHz spectrum licences covering all of Québec and all of Canada’s major urban centres for a total of $187.0 million. With the AWS‑3 licences that we acquired earlier this year and the 700 MHz spectrum licences we acquired in 2014, the Telecommunications segment is now well equipped to develop its Québec network in the coming years. As for the licences we have acquired outside Québec, at this point, we need to maximize the return on those investments, which were made at a very advantageous price and for which various options are available to us. We will hold to a prudent, disciplined approach in order to maximize returns while minimizing risk, particularly in light of Quebecor’s numerous projects currently in the development stage,”Pierre Dion added.
“The Telecommunications segment posted strong returns again in the second quarter of 2015, with a $43.9 million (6.3%) increase in revenues and a $10.2 million (3.1%) increase in adjusted operating income under market conditions that remain highly competitive,” commented Manon Brouillette, President and CEO of Videotron. “Once again, the growth was due to the excellent performance of our mobile telephony and Internet access services.
“Total ARPU from all of Videotron’s services was $133.71 in the second quarter of 2015. The $10.10 (8.2%) increase was again propelled by robust growth in mobile telephony, where ARPU was up $5.69 (13.8%).”
“In the Media segment, TVA Sports became the most-watched sports channel in Québec in its first season as the exclusive French‑language broadcaster of the NHL playoffs,” said Julie Tremblay, President and CEO of Media Group. “The audience for the 12 playoff games in which the Montreal Canadiens were involved averaged 1,577,000 viewers and peaked at 2.5 million, for a 49.1% market share. Since the addition of NHL games to its schedule, TVA Sports has significantly increased its subscriber base to 2.1 million.
“In addition, on July 15, 2015, Quebecor Content announced a long-term multiplatform agreement with Sony Pictures Television Canada (“Sony Canada”) which will enable Videotron to offer a vast selection of movies and television series on its over-the-top video service and give TVA Group Inc.’s (“TVA Group”) television channels exclusive French-language broadcast rights to productions in Sony Canada’s catalogue.”
“On the financial front, in July 2015, Videotron prepaid and withdrew the entirety of its 9.125% Senior Notes in the aggregate principal amount of US$75.0 million and its 7.125% Senior Notes in the aggregate principal amount of $300.0 million,” said Jean‑François Pruneau, Senior Vice President and CFO of Quebecor.“The redemptions were financed from Videotron’s new bank credit facility, which was increased, extended and amended on very advantageous terms. These opportunistic financing transactions will generate annual savings of approximately $20,0 million in interest on the debt.
“In the first half of 2015, therefore, Quebecor actively pursued its business plan, focusing on areas with strong growth potential,” said Pierre Dion.“The Corporation remains well positioned to achieve its business development and shareholder value-creation targets.”
Finally, the Board of Directors of Quebecor announced today that Érik Péladeau is rejoining the Board. Mr. Péladeau served as a Director of the Corporation from 1988 to 2010 and as Vice Chairman of the Board for much of that period. He is the eldest son of Pierre Péladeau, the founder of Quebecor. Érik also spearheaded the diversification of Quebecor’s digital content offerings with the creation of Quebecor Multimedia.
“The business philosophy and entrepreneurial spirit of Quebecor’s founder, Pierre Péladeau, have been the cornerstone of the Corporation’s success for more than 50 years,” commented the Board of Quebecor. “In this respect, Érik is a chip off the old block. His vision and business experience will be valuable assets for the Corporation.”
“After devoting several years to my own company, I wanted to make a contribution to Quebecor, the company founded by my father where I worked for more than 28 years,” said Érik Péladeau. “The Board felt my experience could be useful and welcomed my offer. I thank all of its members.”
Érik Péladeau works at the company he founded, Groupe Lelys, a printer of self-adhesive labels, and is actively involved in a variety of philanthropic activities. He has also been a member of the Board of Directors of Jean Coutu Group Inc.
1 - The sum of subscriptions to the cable television, cable Internet access and over-the-top video services, plus suscriber connections to the cable and mobile telephony services.
For more details and to consult definitions of "adjusted operating income", "adjusted income from continuing operations" 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.