Montréal, Québec – Quebecor Inc. (“Quebecor” or the “Corporation”) today reported its consolidated financial results for the fourth quarter and full year 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.
For the purposes of this press release, the Corporation has also added the non-IFRS measure “Consolidated cash flows from operations” to report the cash flows generated by all of its business segments.
2019 financial year and recent developments
- Revenues: $4.29 billion, up $112.8 million (2.7%) from 2018.
- Adjusted EBITDA: $1.88 billion, a $103.2 million (5.8%) increase. Without restatement of comparative figures following adoption of IFRS 16, adjusted EBITDA increased by $147.4 million (8.5%).
- Net income attributable to shareholders: $652.8 million ($2.55 per basic share) in 2019, compared with $403.7 million ($1.69 per basic share) in 2018, an increase of $249.1 million ($0.86 per basic share). Without restatement of comparative figures following adoption of IFRS 16, net income attributable to shareholders increased by $251.5 million.
- Adjusted income from continuing operating activities: $581.0 million ($2.27 per basic share) in 2019, compared with $469.8 million ($1.96 per basic share) in 2018, an increase of $111.2 million ($0.31 per basic share) or 23.7%.
- Consolidated cash flows from operations: $1.14 billion, up $131.9 million (13.0%).
- Quarterly dividend on the Corporation’s Class A Multiple Voting Shares (“Class A Shares”) and Class B Subordinate Voting Shares (“Class B Shares”) increased by 78% from $0.1125 to $0.20 per share, in line with the policy adopted by the Board of Directors in 2018, aimed at gradually achieving a dividend target of 30% to 50% of the Corporation’s annual free cash flows.
- The Telecommunications segment grew its revenues by $98.4 million (2.9%) and its adjusted EBITDA by $87.8 million (5.1%) in 2019. Without restatement of comparative figures following adoption of IFRS 16, the Telecommunications segment’s adjusted EBITDA increased $126.4 million (7.5%).
- Videotron Ltd. (“Videotron”) posted strong increases in revenues from mobile telephony ($66.3 million or 12.4%), customer equipment sales ($36.3 million or 15.5%) and Internet access ($35.0 million or 3.2%) in 2019.
- Videotron’s total average billing per unit (“ABPU”) was $50.00 in 2019, compared with $49.51 in 2018, a $0.49 (1.0%) increase. Mobile ABPU was $52.56 in 2019 compared with $53.62 in 2018, a $1.06 (‑2.0%) decrease due in part to the popularity of bring your own device plans.
- Videotron posted a net increase of 85,900 revenue‑generating units (“RGU”) (1.4%) in 2019, including 176,700 subscriber connections (15.3%) to the mobile telephony service, the largest annual increase in the number of connections since the launch of the mobile network in 2010; 38,500 subscribers (9.1%) to the Club illico over‑the‑top video service (“Club illico”), and 22,800 subscribers (1.3%) to cable Internet access.
- On December 23, 2019, Videotron announced the closing of the acquisition of Télédistribution Amos inc. and its network in Abitibi‑Témiscamingue. The acquisition is subject to approval from Innovation, Science and Economic Development Canada ("ISED Canada”) and to customary conditions.
- On December 13, 2019, Videotron announced that Samsung Electronics Co. Ltd. has been chosen as its partner for the roll‑out of LTE‑A and 5G radio access technology in Québec and in the Ottawa area. In this phase, Videotron will accelerate construction of its new generation network with a target of gradual commissioning beginning in 2020.
- On October 8, 2019, Videotron issued $800.0 million aggregate principal amount of Senior Notes bearing interest at 4.50% and maturing on January 15, 2030, both the largest issue and lowest coupon rate for 10‑year notes ever on the Canadian high‑yield note market. Videotron used the proceeds mainly to pay down a portion of the amount due under the terms of its secured renewable credit facility.
- On August 27, 2019, Videotron launched Helix, the new technology platform that is revolutionizing 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. The service already has more than 190,000 RGUs.
- On April 10, 2019, Videotron purchased 10 blocks of low‑frequency spectrum in the 600 MHz band in ISED Canada’s latest commercial mobile spectrum auction. The licences, covering Eastern, Southern and Northern Québec, as well as Outaouais and Eastern Ontario, were acquired for $255.8 million.
- On April 1, 2019, TVA Group Inc. (“TVA Group”) closed the acquisition of the companies in the Incendo Media Inc. 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.
- On February 13, 2019, TVA Group closed the acquisition of the companies in the Serdy Média Inc. group, which owns and operates the Évasion and Zeste specialty channels, along with the companies in the Serdy Video Inc. group, for a total consideration of $23.5 million, net of acquired cash of $0.5 million.
- On January 24, 2019, Videotron sold its 4Degrees Colocation Inc. (“4Degrees Colocation”) data centres for $261.6 million, generating a gain on disposal of $97.2 million, net of income taxes of $18.5 million.
Fourth quarter 2019
- Revenues: $1.14 billion, up $49.1 million (4.5%).
- Adjusted EBITDA: $494.5 million, a $34.0 million (7.4%) increase. Without restatement of comparative figures following adoption of IFRS 16, adjusted EBITDA increased by $44.5 million (9.9%).
- Adjusted EBITDA increased $27.3 million (6.3%) in the Telecommunications segment. Without restatement of comparative figures following adoption of IFRS 16, the segment’s adjusted EBITDA increased by $36.8 million (8.6%). Adjusted EBITDA increased in the Media segment by $6.8 million or 23.9%.
- Net income attributable to shareholders: $145.1 million ($0.57 per basic share) in the fourth quarter of 2019, compared with $117.5 million ($0.46 per basic share) in the same period of 2018, a favourable variance of $27.6 million ($0.11 per basic share). Without restatement of comparative figures following adoption of IFRS 16, net income attributable to shareholders increased by $28.2 million in the fourth quarter of 2019.
- Adjusted income from continuing operating activities: $159.6 million ($0.63 per basic share) in the fourth quarter of 2019, compared with $132.9 million ($0.52 per basic share) in the same period of 2018, an increase of $26.7 million ($0.11 per basic share) or 20.1%.
- RGUs: Net increase of 21,800 (0.4%) in the fourth quarter of 2019, including a 41,800 (3.2%) subscriber‑connection increase for the mobile telephony service, the largest fourth‑quarter increase in the number of connections since 2014, and a 15,800 (3.6%) subscriber increase for Club illico.
The 2019 financial year was remarkable for Quebecor in terms of both financial profitability and technological advances. The strong performance of Videotron and TVA Group contributed to a 5.8% increase in Quebecor's adjusted EBITDA in 2019 and a 23.7% increase in adjusted income from continuing operating activities. The excellent results in the fourth quarter of 2019 were also consistent with this trend; among other things, adjusted EBITDA was up 7.4%.
Our solid financial results and business model will allow us to continue investing in promising projects and advanced technologies to support further growth in our mobile telephony business. I am very pleased with the 176,700 subscriber‑connection increase in our mobile phone service registered in 2019, the largest annual increase since the launch of our mobile network in 2010.
Similarly, we continue to progress successfully through the stages in the lead‑up to deployment of our LTE‑A and 5G access networks. We are planning a gradual roll‑out beginning in 2020, with the goal of offering our customers the best in telecommunications services in the world, Mr. Péladeau added.
Videotron has always been at the forefront of major technological changes, and our ability to effectively market advanced technologies that meet our customers' needs is a key factor in our success, said Jean‑François Pruneau, President and Chief Executive Officer of Videotron.
The successful launch in August 2019 of our Helix home entertainment and management platform, based on our partner Comcast Corporation’s Xfinity X1 platform, is a prime example. Already, Helix has more than 190,000 RGUs. The success of Fizz and its all‑digital experience, which contributed to the record increase in our mobile subscriber connections in 2019, is another example.
As we work to reach more customers and expand our geographic reach, we are excited about the planned acquisition of Télédistribution Amos inc., which will end Bell Canada’s monopoly in wireline telephony in the Abitibi‑Témiscamingue region. We will now be able to offer local residents alternative services featuring attractive pricing and the best customer experience.
Club illico continues to post strong customer growth, as evidenced by a 9.1% increase in its subscriber base in 2019, in the face of fierce competition from major international content providers. Our vision and strategies are bearing fruit and we continue to invest heavily in original content. For the current season, we have decided to triple the number of original Québec productions, Mr. Pruneau added.
Thanks in no small part to our impressive internal talent pool, Videotron was included on Mediacorp Canada Inc.’s list of Montréal’s Top Employers in 2020 for the second year in a row. We are very proud of this honour, which is a tribute to our employees, who are the foundation of our success, Mr. Pruneau concluded.
The Media segment's adjusted EBITDA increased $14.8 million (24.7%) in 2019, including a $17.9 million (32.9%) increase at TVA Group.
We are highly satisfied with the significant increase in TVA Group’s profitability in 2019, due primarily to the successful integration of various acquisitions in recent months, combined with the savings yielded by the budget cuts announced in the second quarter. In addition, gains on subscription fees for our specialty services also contributed to the positive results, said France Lauzière, President and Chief Executive Officer of TVA Group.
We are pleased to report that we have renewed the majority of our distribution agreements and that the cable operators have recognized the fair market value of our specialty channels. Now Bell Canada must recognize the fair market value of TVA Sports and all of our other specialty channels currently under negotiation. We continue making representations on this issue to regulatory and government authorities. We welcome the Canadian Radio‑television and Telecommunications Commission decision in favour of TVA Group, which found that Bell Canada had given undue preference to its own sports channel. TVA Sports and RDS are two comparable services and must be treated equitably by Bell Canada in its most popular package.
It should also be noted that TVA Group's total market share reached 36.8% in the fourth quarter of 2019 and TVA Network grew its market share by 0.2 points, concluded Ms. Lauzière.
In the Sports and Entertainment segment, the Videotron Centre completed its fourth year of operations in September 2019. During that year, the Videotron Centre hosted 97 sporting events and concerts, a 6.6% increase from the previous year. In December 2019, the trade magazine Pollstar ranked the Videotron Centre 92nd in the world and 6th in Canada among arenas by 2019 ticket sales.
The Corporation announces the resignation of Manon Brouillette from its Board of Directors. As she is actively involved in investment funds, Ms. Brouillette wants to take advantage of new opportunities, including joining Boards of Directors on which she can serve as an independent director and sit on committees such as the Governance, Human Resources and Audit committees, which she cannot do on the Corporation’s Board. The Board has appointed Michèle Colpron as a Director of Quebecor to fill the vacancy left by Ms. Brouillette’s resignation.
Michèle Colpron has more than 30 years of experience with financial institutions, including 12 years at the Caisse de dépôt et placement du Québec and currently sits on the boards of the Fonds de solidarité FTQ, the Canada Infrastructure Bank and the Investment Industry Regulatory Organization of Canada (IIROC), said the Right Honourable Brian Mulroney, Chair of the Board of Quebecor and Quebecor Media.
We are very pleased to be able to count on Ms. Colpron's collaboration and expertise on the Quebecor Board. On behalf of the Board’s members, I would also like to thank Ms. Brouillette for her contribution as a Director and previously as President and Chief Executive Officer of Videotron.
The Corporation is monitoring the situation with the COVID-19 virus and taking necessary measures to prevent the spread of the virus to its employees and the public. This situation is not expected to have a material financial impact on the Corporation, although our Sports and Entertainment segment could be impacted if the situation worsens in Québec, Pierre Karl Péladeau commented.
As we embark on a new decade, we remain focused on our strategic priorities and the efficiency of our operations while continuing to invest in our growth sectors to create value for our customers, our employees and our shareholders, concluded Pierre Karl Péladeau.
For more details and to consult definitions of "adjusted EBITDA", "adjusted income from continuing operating activities", "consolidated cash flows from operations", "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.