Montréal, Québec – Quebecor Inc. (“Quebecor” or the “Corporation”) today reported its consolidated financial results for the third quarter of 2014. Quebecor consolidates the financial results of its Quebecor Media Inc. (“Quebecor Media”) subsidiary, in which it holds a 75.4% interest.
Third quarter of 2014
- The Telecommunications segment’s revenues were up $23.5 million (3.3%) and its adjusted operating income was up $9.6 million (2.9%) in the third quarter of 2014. Mobile telephony revenues increased by $17.7 million or 30.5% and Internet access revenues by $13.5 million or 6.6%.
- Videotron Ltd. (“Videotron”) grew its revenue-generating units1 by 66,900 in the third quarter of 2014, compared with a 43,500-unit increase in the same period of 2013. All of Videotron’s major services registered larger subscriber increases than in the same period of 2013.
- On October 6, 2014, Quebecor Media announced the sale of 175 English-language newspapers and publications by Sun Media Corporation to Postmedia Network Canada Corporation (“Postmedia”) for a cash consideration of $316.0 million, subject to certain adjustments. The transaction is subject to Competition Bureau approval.
- Quebecor’s consolidated revenues down $1.9 million (-0.2%) to $1.02 billion in the third quarter of 2014. Adjusted operating income down $1.3 million (-0.3%) to $380.2 million.
- Net income attributable to shareholders: $45.1 million ($0.37 per basic share) in the third quarter of 2014, compared with a net loss attributable to shareholders in the amount of $188.8 million ($1.53 per basic share) in the same period of 2013, a favourable variance of $233.9 million ($1.90 per basic share), including the total $181.0 million favourable non-cash impact of fluctuations in the value of goodwill, intangible assets and derivative financial instruments.
- Adjusted income from continuing operations: $65.6 million ($0.53 per basic share) in the third quarter of 2014, compared with $63.1 million ($0.51 per basic share) in the same period of 2013, an increase of $2.5 million ($0.02 per basic share).
- On September 10, 2014, Videotron launched its LTE mobile network (“LTE network”), which reaches nearly 90% of Québec’s population and supports speeds of up to 150 mbps.
- On September 2, 2014, Quebecor Media closed the sale of its Nurun Inc. subsidiary (“Nurun”) to the French company Publicis Groupe for a cash consideration of $125.0 million, plus an estimated $5.3 million receivable in connection with certain adjustments to the transaction, less disposed-of cash.
- On July 1, 2014, TVA Sports became the official French-language broadcaster of the National Hockey League (“NHL”) for the next 12 years.
Quebecor’s adjusted income from continuing operations was up 4.0% in the third quarter of 2014,” commented Pierre Dion, President and CEO of Quebecor. “The Telecommunications segment put in another solid performance in a very competitive environment, with 3.3% and 2.9% increases in revenues and adjusted operating income respectively in the third quarter of 2014. Videotron’s revenue-generating units increased by 66,900 during the quarter, compared with 43,500 in the same period of 2013, and by 106,700 in the 12-month period ended September 30, 2014, which bodes well for continued growth in the segment.
In October 2014, Quebecor announced the sale of Sun Media Corporation’s 175 English-language newspapers and publications to Postmedia, subject to Competition Bureau approval. “This deal comes at a time when Canada’s print media industry needs to consolidate in order to remain viable, given increased competition from digital media and new technological platforms,” said Pierre Dion. In September 2014, Quebecor sold its Nurun subsidiary to Publicis Groupe of France. “The sale of Nurun reflects our desire to concentrate our operations in the four niches that define our mission: being a Canadian leader in telecommunications, media, entertainment, and culture.”
“Videotron pursued its growth in the third quarter of 2014, mainly due to the performance of its mobile telephony and Internet access services,” noted Manon Brouillette, President and CEO of Videotron. “Total average monthly revenue per user (‘ARPU’) from all services increased by $6.78 (5.7%) to $126.02. ARPU from mobile telephone services rose by $2.68 or 6.5% from $41.55 in the third quarter of 2013 to $44.23 in the same period of 2014. The increase reflects, among other things, the success of our new value-added plans, featuring higher data caps at impressive speeds, as well as our optimal selection of mobile devices. The mobile telephony service also continued gaining customers, adding 111,400 subscriber connections over the past 12 months. During the quarter, we launched our LTE network, which covers nearly 90% of Québec’s population at speeds of up to 150 mbps. We continued to innovate by releasing the X8 multi-room HD recorder, which can record eight programs simultaneously and has a 2 TB storage capacity. The launch of our new Fibre Hybrid Internet access services at the beginning of the quarter also had a positive impact on ARPU since a large proportion of new connections included Fibre Hybrid 30 service. Finally, our customer retention initiatives paid off and the overall churn rate decreased to 3.07%, compared with 3.25% in the third quarter of 2013.”
“Our new Media segment continued the integration and repositioning process in the third quarter 2014,” reported Julie Tremblay, President and CEO of Media Group. “We are confident that the significant cost-cutting initiatives we have undertaken in recent years, combined with our decision to dispose of some assets and the development of synergies in our continuing operations, will pay off in coming quarters.”
“TVA Sports scored a resounding success with its broadcast of the Montréal Canadiens’ season opener on October 8, 2014” added Julie Tremblay. “The game drew an average audience of 925,000 television viewers on TVA Sports, a 25.5% market share. Since TVA Sports began carrying NHL hockey, its subscriber base has swelled to more than 1.8 million. The specialty channel has become a new destination for businesses that want to reach sports fans and is attracting larger numbers of prestigious advertisers.”
Benoît Robert was appointed President and CEO of the Sports & Entertainment Group. Mr. Robert has more than 30 years of experience in management, marketing and business development. He has worked for, among others, the Los Angeles Kings in the NHL, owned by AEG, one of the world’s largest managers of sports and entertainment venues.
“Over the past several months, Quebecor has carried out major transactions in order to refocus and transform its more traditional media outlets,” said Pierre Dion. “The Corporation also continued implementing its business plan in its growth segments. It therefore remains strongly positioned to achieve its growth, business development and profitability objectives going forward."
1 - The sum of cable television, cable and mobile Internet access, and cable telephony service subscriptions and subscriber connections to the mobile telephony service.
For more details and to consult definitions of "adjusted operating income" and "adjusted income from continuing operations", 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.