Montréal, Québec – Quebecor Inc. (“Quebecor” or the “Corporation”) today reported its consolidated financial results for the third 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.
Third quarter 2019 highlights
- Revenues: $1.07 billion, up $20.2 million (1.9%) from the third quarter of 2018.
- Adjusted EBITDA $509.3 million, a $35.3 million (7.4%) increase. Without restatement of comparative figures following adoption of IFRS 16, adjusted EBITDA increased $46.2 million (10.0%).
- Net income attributable to shareholders: $178.5 million ($0.70 per basic share) in the third quarter of 2019, compared with $187.1 million ($0.80 per basic share) in the same period of 2018, a decrease of $8.6 million ($0.10 per basic share). Net income attributable to shareholders without restatement of comparative figures following adoption of IFRS 16 was $178.5 million in the third quarter of 2019, compared with $186.7 million in the same period of 2018, an $8.2 million decrease.
- Adjusted income from continuing operating activities $173.8 million ($0.68 per basic share) in the third quarter of 2019, compared with $141.5 million ($0.61 per basic share) in the same period of 2018, an increase of $32.3 million ($0.07 per basic share) or 22.8%.
- The Telecommunications segment grew its revenues by $21.9 million (2.6%) and its adjusted EBITDA by $34.5 million (8.0%) in the third quarter of 2019. Without restatement of comparative figures following adoption of IFRS 16, the Telecommunications segment’s adjusted EBITDA increased $44.2 million (10.4%).
- Videotron Ltd. (“Videotron”) significantly increased its revenues from mobile telephony ($17.4 million or 12.6%), Internet access ($7.3 million or 2.7%) and customer equipment sales ($6.5 million or 10.3%) in the third quarter of 2019.
- Videotron’s total average billing per unit (“ABPU”) was $50.49 in the third quarter of 2019, compared with $49.70 in the same period of 2018, a $0.79 (1.6%) increase. Mobile ABPU was $53.28 in the third quarter of 2019, compared with $54.28 in the same period of 2018, a $1.00 (‑1.8%) decrease due in part to the popularity of bring your own device (“BYOD”) plans.
- There was a net increase of 53,300 revenue-generating units (RGUs) (0.9%) in the third quarter of 2019, including 56,800 connections to the mobile telephony service, an increase 36.9% greater than in the same quarter of 2018, 17,400 subscriptions to cable Internet access service, and 12,500 subscriptions to the Club illico over-the-top video service (“Club illico”).
- On August 27, 2019, Videotron launched Helix, the new technology platform that will revolutionize entertainment and home management with voice remote, ultra-intelligent Wi-Fi, and, coming soon, support for home automation, all tailored to customer needs and preferences.
- On October 8, 2019, Videotron issued $800.0 million aggregate principal amount of Senior Notes bearing interest at 4.5% and maturing on January 15, 2030. Videotron used the proceeds mainly to pay down a portion of the amount due under its secured revolving credit facility.
- On July 15, 2019, Quebecor Media prepaid the balance of its term loan “B” and settled the related hedging contracts for a total cash consideration of $340.9 million.
Quebecor generated solid 7.4% growth in adjusted EBITDA in the third quarter of 2019 compared with the same quarter of 2018. Combined with the decrease in the interest charge on its debt and its convertible debentures, this growth yielded a 22.8% increase in adjusted income from continuing operating activities. Videotron remains our main growth driver and we are particularly proud of its excellent performance this quarter since we successfully launched our new Helix technological platform at the end of August 2019. Based on our partner Comcast Corporation’s Xfinity X1 platform, Helix already had more than 30,000 subscribers barely five weeks after launch. It is a concrete example of Quebecor’s vision, commitment to investing in forward-looking projects and ability to skillfully execute on its business strategies, while maintaining sound management of its balance sheet.
Videotron’s robust business model and its ability to generate organic growth held strong, as reflected by the 168,000 increase in connections to the mobile telephony service during the 12-month period ended September 30, 2019, the largest increase in the number of connections since our mobile network launched in 2010, commented Jean-François Pruneau, President and Chief Executive Officer of Videotron.
During the quarter, we once again demonstrated our ability to stay at the leading edge of evolving consumer needs and maintain our position as a leader in innovation and customer experience.
With a 40,600-customer increase during the 12-month period ended September 30, 2019, Club illico continued to perform strongly and to grow its market share. Investing in original content lets us stand out and reach the widest possible audience in an aggressively competitive market, which is why we have decided to triple the number of original Québec productions for the 2019‑2020 season.
Videotron was rated the coolest telecom again this year by young Quebecers aged 13 to 37 in Léger’s youth survey and I am very proud of this success, as we are investing heavily to meet their needs.
We also continue fighting Bell Canada’s monopolistic practices. We have filed an application asking the Competition Bureau of Canada to investigate certain actions by Bell Canada aimed at substantially restricting competition in the Abitibi‑Témiscamingue market, unduly penalizing the region’s residents and businesses, Jean-François Pruneau concluded.
TVA Group Inc.’s (“TVA Group”) consolidated adjusted EBITDA increased by $3.1 million in the third quarter, due in part to our acquisitions in recent months and the decrease in operating expenses related to, among other things, the savings generated by the budget cuts announced in the previous quarter, said France Lauzière, President and Chief Executive Officer of TVA Group.
TVA Group’s total television market share increased 0.2 points to 38.3%. TVA Sports continued to grow its audience with a 0.4‑point jump in market share during the quarter, clear evidence that viewers recognize the quality of its programming. The strong performance of our specialty channels is noteworthy and underscores the point that our channels have been inequitably priced for years and their subscription fees do not reflect their market share and their fair value. Bell Canada must acknowledge the issues facing our entire industry and recognize the fair value of specialty channels. We continue making representations on this issue to regulatory and government authorities. We are pleased to report that we have renewed some distribution agreements with cable operators that recognize the fair market value of our specialty channels.
Videotron again demonstrated that it is regarded as a first-class issuer and we are very pleased with the response to the issuance on the Canadian market of high-yield notes in the aggregate principal amount of $800.0 million bearing interest at 4.5%, making it both the largest issue and lowest coupon rate for 10-year notes ever on this market, said Hugues Simard, Chief Financial Officer of Quebecor and Quebecor Media.
On the matter of aggregated wholesale access by resellers to the Internet networks of the large cable and telephone companies, we note the interim stay of the Canadian Radio‑television and Telecommunications Commission’s (“CRTC”) order regarding access rates, which was granted by the Federal Court of Appeal on September 27, 2019, Pierre Karl Péladeau stated.
We strongly believe that both the process used and the conclusions reached by the CRTC were and are deeply flawed.
Our initiatives and actions are always aimed at offering our customers the best products and services, and a wide range of choices. We will continue executing our business strategies and investing in innovative projects to ensure continued success and sustainable growth for the benefit of our shareholders and all our stakeholders, Pierre Karl Péladeau concluded.
For more details and to consult definitions of "adjusted EBITDA", "adjusted income from continuing operating activities", "average billing per unit" and "revenue-generating 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.