Montréal, Québec – Quebecor Inc. (“Quebecor” or the “Corporation”) today reported its consolidated financial results for the first quarter of 2019 and announced an increase of more than 100% in its quarterly dividend. Quebecor consolidates the financial results of Quebecor Media Inc. (“Quebecor Media”), a wholly owned subsidiary since June 22, 2018.
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.
First quarter 2019 highlights
- Revenues: $1.03 billion, up $25.3 million (2.5%) from the same period of 2018.
- Adjusted EBITDA: $420.7 million, up $4.8 million (1.2%). Without restatement of comparative figures following adoption of IFRS 16, adjusted EBITDA increased $15.9 million (3.9%).
- Net income attributable to shareholders: $189.0 million ($0.74 per basic share) in the first quarter of 2019 compared with $57.1 million ($0.24 per basic share) in the same period of 2018, a favourable variance of $131.9 million ($0.50 per basic share). Net income attributable to shareholders without restatement of comparative figures following adoption of IFRS 16 was $189.0 million in the first quarter of 2019 compared with $56.7 million in the same period of 2018, a $132.3 million increase.
- Adjusted income from continuing operating activities: $111.4 million ($0.44 per basic share) in the first quarter of 2019, compared with $89.5 million ($0.38 per basic share) in the same period of 2018, an increase of $21.9 million ($0.06 per basic share) or 24.4%.
- The quarterly dividend on the Corporation’s Class A Multiple Voting Shares (“Class A Shares”) and Class B Subordinate Voting Shares (“Class B Shares”) has been increased by more than 100% from $0.055 to $0.1125 per share.
- The Telecommunications segment grew its revenues by $22.0 million (2.7%) and its adjusted EBITDA by $5.8 million (1.4%) in the first quarter of 2019. Without restatement of comparative figures following adoption of IFRS 16, the Telecommunications segment’s adjusted EBITDA increased $15.1 million (3.7%).
- Videotron Ltd. (“Videotron”) significantly increased its revenues from mobile telephony ($15.6 million or 12.4%), Internet access ($12.0 million or 4.6%) and customer equipment sales ($3.7 million or 8.1%) in the first quarter of 2019.
- Videotron’s total average billing per unit (“ABPU”) was $49.47 in the first quarter of 2019 compared with $48.82 in the same period of 2018, a $0.65 (1.3%) increase. Mobile ABPU was $52.50 in the first quarter of 2019 compared with $53.25 in the same period of 2018, a $0.75 (‑1.4%) decrease due in part to the popularity of bring your own device plans, multi‑line plans and the impact of the launch of Fizz, the new advantageously priced, fully digital mobile brand.
- There was a net increase of 23,300 revenue-generating units (“RGUs”) (0.4%) in the first quarter of 2019, including 39,800 connections (3.4%) to the mobile telephony service, 10,900 subscriptions (2.6%) to the Club illico over‑the‑top video service (“Club illico”) and 6,300 subscriptions (0.4%) to cable Internet access service.
- On April 10, 2019, Quebecor announced the purchase by Videotron of 10 blocks of low-frequency spectrum in the 600 MHz band in Innovation, Science and Economic Development Canada’s (“ISED Canada”) latest commercial mobile spectrum auction. The licences, covering Eastern, Southern and Northern Québec, as well as Outaouais and Eastern Ontario areas, were acquired for $256.0 million.
- On January 24, 2019, Videotron sold its 4Degrees Colocation Inc. (“4Degrees Colocation”) data centre operations for $261.6 million, which was fully paid in cash at the date of transaction. An amount of $0.9 million relating to a working capital adjustment was also payable by Videotron as of March 31, 2019. A gain on disposal of $97.2 million, net of income taxes of $18.5 million, was accounted for in the first quarter of 2019, while an amount of $53.1 million was deferred in respect of the estimated present value of the future conditional adjustments.
Our financial results for the first quarter of 2019 again reflect the soundness of Videotron’s business model and the sustained, profitable growth generated by its growth drivers, the mobile telephony and Internet services. Early in the year, we cemented our position as a tech leader when Videotron acquired 10 blocks of low-frequency spectrum in the 600 MHz band, which will allow the roll-out of 5G. Our ongoing investments in advanced technology will enable us to maintain the industry-leading growth of our mobile telephone service in Québec and the Ottawa area, and to promote real, sustainable competition for the benefit of consumers.
TVA Group Inc. (“TVA Group”) increased its total market share by 2.1 points to 38.3% in the first quarter of 2019, due in large part to a 1.8‑point increase at the specialty channels, including substantial 0.7-point growth at TVA Sports. LCN increased its market share to 4.7%, extending its lead as the Québec’s most-watched specialty channel. We are very satisfied with the quality and performance of our specialty channels and we will continue fighting to obtain royalties that reflect their true value, Pierre Karl Péladeau added.
Subscriber connections to our mobile telephony and Internet access services increased by 146,300 or 14.0% and 36,200 or 2.2% respectively during the 12-month period ended March 31, 2019, said Jean-François Pruneau, President and Chief Executive Officer of Videotron.
These increases are indicative of the quality and relevance of our services, which we are constantly enhancing, and the level of customer satisfaction.
We maintained our momentum in terms of innovation and product offerings in the first quarter of 2019, capitalizing on the interest spurred by our new fully digital cellphone service, Fizz, which helped propel the net increase in subscriber connections to our mobile services to nearly 40,000, to roll out recently residential Internet service under the same brand. We are very enthusiastic about the positive response to date and will continue developing and leveraging this new high-potential brand, which perfectly complements our flagship Videotron brand. Our investments in the development of our Helix platform, based on our partner Comcast Corporation’s Xfinity XI platform, are also starting to bear fruit. Helix centralizes all the technologies used inside the home. It is currently being tested with a significant number of our employees. The results are positive, and we expect to launch in the coming months.
I am also very proud of the many honours Videotron garnered in the first quarter of 2019. It placed first in customer experience among Canadian mobile carriers on the Forrester Customer Experience Index. Videotron was also rated the most respected telecommunications provider in Québec for the 14th consecutive year by Léger’s 2019 Reputation survey and ranked as Québec’s most influential telecommunications brand on the 2019 Ipsos-Infopresse index. Finally, Videotron made its appearance on Media Corp. Canada’s list of Canada’s 70 greenest employers in 2019, Mr. Pruneau noted.
TVA Group increased its adjusted EBITDA by 18.7% in the first quarter of 2019, largely as a result of the savings generated by the various cost‑cutting initiatives at our magazines, reported France Lauzière, President and Chief Executive Officer of TVA Group.
The improvement was also due to increased postproduction volume in our film production and audiovisual services division, reflecting the impact of the acquisitions made in recent quarters. As well, the addition of the Évasion and Zeste channels is already yielding returns, both financially and by enhancing our content offering for the benefit of our viewers and advertisers. On April 1, 2019, we closed the acquisition of the companies in the Incendo Media inc. group, a Montréal-based producer and distributor of television programs for international markets. The transaction is in keeping with our push to increase our revenues from other markets and step up our development internationally, especially in English-language markets.
We are off to a strong start in 2019 and on track to achieve our targets. We will continue working every day to increase our agility, improve our performance and build shareholder value. We remain focused at all times on our mission of being the first choice of consumers and businesses by delivering the best possible customer experience in telecommunications, news media, culture and entertainment, Pierre Karl Péladeau concluded.
For more details and to consult definitions of "adjusted EBITDA", "adjusted income from continuing operating activities", "revenue-generating unit" 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.