Montréal, Québec – Quebecor Inc. (“Quebecor” or the “Corporation”) today reported its consolidated financial results for the third quarter of 2015. Quebecor consolidates the financial results of its Quebecor Media Inc. (“Quebecor Media”) subsidiary. On September 9, 2015, the Corporation’s interest in Quebecor Media was increased from 75.4% to 81.1% following the repurchase by Quebecor Media of 7,268,324 Common Shares of its capital stock held by CDP Capital d’Amérique Investissement inc. (”CDP Capital”), a subsidiary of the Caisse de dépôt et placement du Québec.
Third quarter 2015
- Revenues: $971.7 million, up $83.9 million (9.5%) from the same period of the previous year.
- Adjusted operating income: $391.4 million, up $29.6 million (8.2%).
- Net income attributable to shareholders: $85.1 million ($0.69 per basic share) in the third quarter of 2015, compared with $45.1 million ($0.37 per basic share) in the same period of 2014, a favourable variance of $40.0 million ($0.32 per basic share).
- Adjusted income from continuing operations: $74.0 million ($0.60 per basic share) in the third quarter of 2015, compared with $58.1 million ($0.47 per basic share) in the same period of 2014, an increase of $15.9 million ($0.13 per basic share) or 27.4%.
- On October 15, 2015, the Supreme Court of Canada rejected an application from Bell ExpressVu Limited Partnership (“Bell ExpressVu”), a subsidiary of Bell Canada, for leave to appeal the Court of Appeal of Quebec judgement ordering it to pay compensation to Videotron Ltd. (”Videotron”) and TVA Group Inc. (“TVA Group”). Accordingly, a $139.1 million non‑adjusted‑operating-income gain on litigation was recognized in the third quarter of 2015.
- On September 9, 2015, Quebecor Media repurchased a portion of CDP Capital’s interest for $500.0 million, increasing the Corporation’s interest in Quebecor Media from 75.4% to 81.1%.
- The Telecommunications segment’s revenues were up $43.0 million (6.0%) in the third quarter of 2015 and its adjusted operating income was up $11.2 million (3.3%) despite an $8.3 million unfavourable variance in one‑time items. Videotron’s revenues from mobile telephony increased by $30.8 million (40.7%), from Internet access services by $15.3 million (7.1%), and from the Club illico over-the-top video service by $2.5 million (73.5%).
- Videotron’s average monthly revenue per user (“ARPU”) increased by $10.92 (8.7%) from $126.02 in the third quarter of 2014 to $136.94 in the third quarter of 2015, including an increase of $4.94 (11.2%) in revenues from the mobile telephony service.
- Revenue-generating units1: Net increase of 85,800 units (1.6%) in the third quarter of 2015, including increases of 39,600 subscriber connections to the mobile telephone service, 35,700 subscriptions to the over-the-top video service and 20,400 subscriptions to the cable Internet access service.
- Over the 12-month period ended September 30, 2015, the total number of revenue-generating units increased by 185,700 (3.4%), including an increase of 152,100 subscriber connections to the mobile telephony service, the largest 12‑month increase since 2011. Subscriptions to the over-the-top video service increased by 84,800 during the 12‑month period.
- The Media segment’s revenues were up by $39.7 million (21.3%) in the third quarter of 2015 and its adjusted operating income by $19.0 million (78.2%) due, among other things, to the strong performance of MELS studios, acquired in December 2014.
Our Corporation grew its revenues and adjusted operating income in the third quarter of 2015,” said Pierre Dion, President and CEO of Quebecor. “Revenues increased in all our business segments. The solid performance reflects our effective investments and business development strategy. The strong third-quarter results were driven by the continuing success of Videotron’s service offering, particularly mobile telephony, which is steadily expanding its customer base, and by successful revenue diversification in the Media segment, with the acquisition of substantially all of the assets of MELS studios and the emergence of the TVA Sports specialty channel. It is also noteworthy that adjusted income from continuing operations was up $15.9 million, or 27.4%, in the third quarter of 2015 compared with the same period of 2014.
“Once again, the Telecommunications segment posted very strong results, increasing both its revenues and its operating income,” commented Manon Brouillette, President and CEO of Videotron. “It should be noted that the increase in adjusted operating income would have been greater still were it not for the impact of one-time items. The results were again driven by the excellent performance of our mobile telephony service, which now serves 742,500 customers, and our Internet access service, which has more than 1.5 million customers. I should also mention the significant growth of our Club illico over-the-top video service, the Canadian standard for French‑language on-demand subscription content, available without limitation to its 228,500 subscribers. Revenues from our business services also jumped 13.7% in the third quarter of 2015, reflecting our sustained growth in this developing segment.
“The number of connections to the mobile telephony service increased by 152,100 (25.8%) during the 12‑month period ended September 30, 2015, the largest 12-month gain for the service since 2011, despite the highly competitive market environment. Total ARPU for all of Videotron’s services was up $10.92 (8.7%) to $136.94 in the third quarter of 2015, again propelled by the growth of the mobile telephony service, whose ARPU rose by $4.94 (11.2%). This success is closely related to the performance of our LTE network, which was rated ‘the fastest in Canada’ by a report from the UK-based firm OpenSignal released in September.
“To enhance its offering of hosting and data processing services to its business customers, Videotron announced capital expenditures of $75.0 million over several years to expand the 4Degrees Colocation Inc. data centre in Québec City and build a new 4,000 square-metre data centre in Montréal. These investments are the second phase of an initiative launched in March with the acquisition of the Québec City data centre. Our two data centres, which meet the highest industry standards, equip us to meet our business customers’ surging data processing needs.
“In keeping with its commitment to innovation and its determination to stay at the industry’s leading edge, Videotron released the illico 4K ultra-HD PVR during the quarter, becoming the first Canadian telecommunications provider to offer customers throughout its service area ultra‑high‑definition on a commercial basis. We also launched Unlimited Music, a service that allows some subscribers to our LTE mobile network to stream music via the most popular platforms without restriction and without using their mobile data plan,” Ms. Brouillette concluded.
“The Media segment grew its revenues by $39.7 million (21.3%) and its adjusted operating income by $19.0 million (78.2%),” noted Julie Tremblay, President and CEO of Media Group. “Our business acquisition strategy made a significant contribution to adjusted operating income, thanks to the addition of the results of MELS, a flagship of Québec’s film production and audiovisual services industry that has earned an international reputation. Our strong results were also due to our strategy of investing in new products, including the TVA Sports specialty channel, whose subscriber base has shot up since its creation in September 2011, contributing to the improved third quarter 2015 results. Finally, our cost-reduction and control program has also helped maintain the profitability of our over‑the‑air television network (TVA Network).
“In print and electronic media, Le Journal de Montréal, Le Journal de Québec and the free daily 24 heures remain Québec’s news leaders, according to the most recent Vividata survey data for Fall 2015. Every week, they reach a total of more than 3.8 million readers across all platforms (print, mobile and Web). TVA Publications is now Canada’s magazine industry leader with 10.8 million readers across all platforms. We are very proud of these excellent results and pleased by the popularity of our dailies on print and digital platforms alike. This success confirms the soundness of our decision to focus on our print editions while continuing intensive innovation on the digital front to offer our readers multiplatform options and meet our advertisers’ specific needs.”
In the Sports and Entertainment segment, the Videotron Centre has already welcomed more than 300,000 guests since its official opening in September 2015. It has successfully hosted numerous sporting and entertainment events, and an extensive schedule of events has been announced for the coming weeks and for 2016. In connection with the effort to land a National Hockey League (“NHL”) franchise, whose home arena would be the Videotron Centre, Quebecor management presented its business plan to the NHL Executive Committee at the NHL’s head office in New York City in September.
Finally, other long-term development initiatives were announced during the quarter, including a strategic partnership between Quebecor Content and NBCUniversal International Studios to develop new entertainment formats. The creation of Goji, a project that provides support for the best YouTube content creators to help them develop their brands, and an agreement with the French company meltygroup, which operates a suite of websites for young people aged 15 to 30, will also position Quebecor to make major breakthroughs in the booming market for content aimed at young adults.
In September 2015, Quebecor Media completed the repurchase of a portion of CDP Capital’s interest in its capital stock, as part of its plan, launched in October 2012, to purchase and repurchase the Quebecor Media shares held by the Caisse de dépôt et placement du Québec. “We are reaffirming our long-term goal of making Quebecor the sole shareholder in Quebecor Media,” said Jean‑François Pruneau, CFO of Quebecor. “This transaction was financed in accordance with our basic objective of maintaining sound balance sheet management. It is a positive move both for our financial partner, which has supported us since the creation of Quebecor Media in 2000, and for our shareholders.”
“Quebecor thus posted strong consolidated financial results in the third quarter of 2015 as it pursued its business plan focused on investment in activities with strong developmental potential,” commented Pierre Dion. “The Corporation remains favourably positioned to achieve its profitability and growth objectives for full year 2015 and future years.”
1 - The sum of subscriptions to the cable television, cable Internet access and over-the-top video 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 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.