Montréal (Québec) – Quebecor Inc. (“Quebecor” or the “Corporation”) today reported its consolidated financial results for the second quarter of 2019. Quebecor consolidates the financial results of Quebecor Media Inc. (“Quebecor Media”), a wholly owned subsidiary since June 22, 2018.
As described under “Changes in Accounting Policies” below, on January 1, 2019 the Corporation adopted on a fully retrospective basis the new rules in IFRS 16 – Leases. Accordingly, comparative figures have been restated to reflect the impact of the new rules.
Second quarter 2019 highlights
- Revenues: $1.06 billion in the second quarter of 2019, up $18.2 million (1.8%) from the same period of 2018.
- Adjusted EBITDA: $455.0 million, up $29.1 million (6.8%). Without restatement of comparative figures following the adoption of IFRS 16, adjusted EBITDA increased $40.8 million (9.9%).
- Net income attributable to shareholders: $140.2 million ($0.55 per basic share) in the second quarter of 2019, compared with $42.0 million ($0.18 per basic share) in the same period of 2018, an increase of $98.2 million ($0.37 per basic share). Without restatement of comparative figures following the adoption of IFRS 16, net income attributable to shareholders was $140.2 million in the second quarter of 2019 compared with $41.3 million in the same period of 2018, a $98.9 million increase.
- Adjusted income from continuing operating activities: $136.2 million ($0.53 per basic share) in the second quarter of 2019, compared with $105.9 million ($0.45 per basic share) in the same period of 2018, an increase of $30.3 million ($0.08 per basic share) or 28.6%.
- The Telecommunications segment grew its revenues by $12.0 million (1.4%) and its adjusted EBITDA by $20.2 million (4.7%) in the second quarter of 2019. Without restatement of comparative figures following the adoption of IFRS 16, the Telecommunications segment’s adjusted EBITDA increased $30.3 million (7.2%).
- Videotron Ltd. (“Videotron”) significantly increased its revenues from mobile telephony ($15.6 million or 11.9%) and Internet access ($7.1 million or 2.6%) in the second quarter of 2019.
- Videotron’s total average billing per unit (“ABPU”) was $50.20 in the second quarter of 2019, compared with $49.68 in the same period of 2018, a $0.52 (1.0%) increase. Mobile ABPU was $52.56 in the second quarter of 2019 compared with $53.70 in the same period of 2018, a $1.14 (‑2.1%) decrease due in part to the popularity of bring your own device plans.
- Subscriber connections to the mobile telephony service increased by 38,300 in the second quarter of 2019 compared with an increase of 31,900 in the same period of 2018.
- On June 5, 2019, TVA Group Inc. (“TVA Group”) announced that, on account of significant viewing changes related to the globalization of content and of the proliferation of unregulated distribution vehicles, it needed to make deep budget cuts to preserve its leading position in the Québec market and protect the production of original French‑language content in Québec. TVA Group’s budget reduction plan affects all its segments and regrettably entails the elimination of 68 positions.
- On April 10, 2019, Videotron acquired 10 blocks of low‑frequency spectrum in the 600 MHz band in Innovation, Science and Economic Development Canada’s (“ISED Canada”) commercial mobile spectrum auction. The licences, covering the Eastern, Southern and Northern Québec, as well as the Outaouais and Eastern Ontario regions, were acquired for $255.8 million. Among other things, they will support the roll‑out of 5G new‑generation mobile capabilities.
- On April 1, 2019, TVA Group closed the acquisition of the companies in the Incendo Media inc. (“Incendo Media”) group, a Montréal‑based producer and distributor of television programs for international markets, for a cash consideration of $11.1 million (net of cash acquired of $0.9 million) and a balance payable at fair value of $6.8 million.
I am very satisfied with Quebecor’s performance in the second quarter of 2019. The Corporation’s operating profits continued to show strong growth, driven by Videotron. It demonstrates our ability to deliver on our action plans, which target promising investments for the Corporation’s future.
Videotron maintained its excellent performance, particularly in mobile telephony, where subscriber connections increased by 152,700 or 14.1% during the 12‑month period ended June 30, 2019, commented Jean‑François Pruneau, President and Chief Executive Officer of Videotron.
Our constant goal is to strengthen that trend and retain our leading position by innovating and investing in state‑of‑the‑art technology. With our partners in the Open‑Air Laboratory for Smart Living, we announced the creation of a first new‑generation 5G site that will help lay the foundations for the development of the next‑generation mobile network. We also continued working on the upcoming launch of Helix, based on our partner Comcast Corporation’s Xfinity XI platform. Currently in testing with a large group of employees, Helix will enable convergence among all the technologies in a home. To enlarge our geographic footprint, we also announced plans to expand into the Abitibi‑Témiscamingue region, now served by a single wireline provider, and offer our cable television, Internet and cable telephone services there, in addition to our currently available mobile telephony service.
During the quarter, Fizz won the prestigious ‘Tribeca Disruptive Innovation Award,’ awarded by the TM Forum to recognize digital innovation, Mr. Pruneau added.
The TM Forum is the telecommunications industry association that includes digital service providers around the world. I am very proud of this honour and also of Videotron’s No. 1 ranking on the Top‑Rated Workplaces: Best in Québec list, based on reviews left by employees on Indeed, Canada’s top job site.
TVA Group posted a $6.6 million favourable variance in adjusted EBITDA in the second quarter, largely because of the integration of the Évasion and Zeste specialty channels and the improvement in TVA Sports’ negative adjusted EBITDA, combined with cost‑reduction initiatives implemented during the quarter, said France Lauzière, President and Chief Executive Officer of TVA Group.
In the second quarter of 2019, TVA Group was forced to make deep budget cuts in response to economic and competitive environments that have been destabilizing the television industry for years, combined with a regulatory framework that places Québec and Canadian companies at a competitive disadvantage, Mr. Péladeau commented.
For years, the television industry has been contending with numerous inequities, which have been exacerbated by the lack of decisive action by regulatory authorities to modernize the Canadian system.
Moreover, the announced acquisition of the conventional television network V and its digital assets by Bell Media will further undermine Québec’s media ecosystem by allowing a dominant player to become even more so. We have therefore been forced to take action and we are making our case to the appropriate bodies in order to protect the services available to consumers for the long term. The business practices of Bell Canada, which is both broadcaster and distributor, do not recognize the fair market value of TVA Group’s specialty channels, including TVA Sports, and have forced us to sound the alarm to alert regulatory authorities to the need to correct these major flaws in the Canadian broadcasting system.
In view of the CRTC's refusal to act and inability to modernize, we intend to vigorously defend our rights in court, as we have done successfully againts Bell Canada on several occasions, Mr. Péladeau added.
We continue investing and diversifying our revenue streams by broadening our range of products and services and expanding geographically in order to give consumers a real choice. Building on our successes, which have delivered attractive returns for our shareholders and a stimulating work environment for our employees, we are more firmly focused on the future than ever, Pierre Karl Péladeau concluded.
For more details and to consult definitions of "adjusted EBITDA", "adjusted income from continuing operating activities" and "average billing per unit", 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.