Q3 2019 Earnings Call
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[noise] good day, ladies and gentlemen, well, thank you for standing by and welcome to there could be called incorporated conference call I would like to introduce <unk> Casino Chief financial officer of cubic called incorporated and Cubicle Media Inc. Please go ahead.
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[noise], sorry for the D'alene's, ladies and gentlemen, once again.
Welcome.
To the.
Pardon me to the cubic all incorporated conference call I'd like to introduce <unk> Cmos Chip Chief Financial Officer.
And.
And cubic.
Given color and cubic all the media. Please go ahead.
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Okay. Good morning, everyone, a we apologize sincerely for this a delay.
Oh for technical difficulties beyond our control we will it. This is the second time that this happens as you know so we will definitely look into this and fix it for next time, sorry about the delay.
So welcome Nonetheless, the this that go back or conference call. My name is actually not I'm, the Chief Financial Officer, and joining me to discuss our financial and operating results for the third quarter of 2019, Rps Kalpana, though.
Our president and Chief Executive Officer jump on supposed to be no President and Chief Executive Officer of you deal with home and pumps, Louisiana, President and CEO of TV a group.
You'll be able to listen to this conference call on tape until February the fifth 2020 by dialing 877 to 9381 Threethree Conference access code for a 006.
A number sign.
And playback access gold for AIDS. There was there were six number aside. This information is also available on cut that cores website at www dot cut back or dotcom.
I also want to inform you that certain statements made on the call today, maybe considered forward looking and we would refer to the refer you.
To the risk factor as outlined in today's press release and reports filed by the corporation with regulatory authorities.
Let's now start with our first speaker, Yeah, Kelcy that nephew again, and then good morning, everyone.
So I'm very happy to report to successful quarter across all our operations.
Throttled by the continued momentum of our telecom operation, where we reach yet another strategic milestone this quarter with the launch of our much awaited new IP TV platform helix, which hit the market on August 27.
After only five weeks, we had already or reach more than 30000 customers and we are working hard to meet the ongoing demand for this innovative technology Hot Swappable, obviously say more about it later.
Delivering a smarter more powerful wide fine and enhance TV experience. Thanks do voice activation.
Seamless integration of web content platform and soon home automation services helix will change the week of backwards enjoy your bankers enjoy own conductivity and provides a superior platform compared to our two the bell offering.
As we continue to offer innovative technology as well as differentiated content and services, we will keep our focus and efforts to maintain even improve.
Our proven unparalleled customer service and overall client experience.
It was a busy quarter on the regulatory front as well, most notably witness yards easy decisions to lower all sales accident raise access rates.
Without any obligation from resellers I like that to invest in anything or to return any savings to consumers.
Decisions, we have appeal and intent on fighting actively as we strongly believe that both the process use and the conclusion reach by this year DC were and are deeply fall.
Let me be clear.
We have nothing against competition quite the opposite.
It stimulates industry participants as we improve with the launch and the success of our wireless business.
The only difference was and it is a big one.
We invested in the network and created jobs that.
These are doing none of that you're simply getting a free lunch.
Moreover, it is crucial with our.
Yes.
I'm sorry.
Also on the governmental front I.
I would like to comment on different media credits recently announced by the ground I'm not giving.
Although we have always favored the free market rules, we certainly want project that money, which will otherwise continued to finance lame duck media operations without the necessary convergence and integration, that's becoming everything less relevant in the market.
We also regret that this supports does not apply to electronic media, thereby unfairly, creating two classes of journalists.
Turning to our third quarter results, we are very happy with continued growth and even even improving profitability of our telecom segment.
Where do you do at home and Chief yet again, the EBITDA margins of the industry.
More specifically in our wireless operations, we generated 57000 net ads in the quarter, 37% more than in the same quarter last year and 168000 over the last 12 months the highest since the launch of our mobile business.
Nearly 10 years ago.
Our two brand new tomo, while and say is let the market with 30% of total gross ads during the third quarter with fear is performing exceptionally well a clear proof that this second stem in our wireless plan is as much as success of our initial launch.
In 2010.
In our media segment, the expansion of our content offering to the additions of new specialty channels and the acquisition of the Ensign and sender group of content and distribution company as well our continued effort to optimize our operating costs have all contributed to a significant.
The improvement in our profitability this quarter.
In addition, we're pleased with the performance on previous fall, which continues to grow audience, a clarifying that viewers recognize and superior programming and also with our magazines sector, which improve its profitability. Despite a challenging advertising revenue environment.
Finally in our sports and entertainment segment.
We're very proud to have been choosing the output.
Of the reversals and first shows of the new cylinder.
First door with Paul Mccartney at Victoria's Secret stores, having already done the thing that sounds like due to home is clearly establishing itself as a perfect venue, we're entering the national artist to launch their world tours.
Our growing success in sports Entertainment also shows that did that this emerging segment clearly fits within and contributes to our strategy of media convergence.
I will now let you.
Review, our consolidated financial results.
Mississippi account.
The bankers revenues were up 2% in the quarter the $1.7 billion.
Revenues from our Telecom segment grew 3% to 877 million.
Good Becor's EBITDA was up more than 7% to $509 million. Our telecom segment recorded an 8% EBITDA growth to $468 million, while our media operations recorded EBITDA of $33 million, an improvement of $2 million over last year.
Had we not decided to restate the impact of my as far as 16 retroactively EBITDA growth growth for both go back or in our telecom segment would have been 10%.
We reported a net income attributable to shareholders of $179 million in the quarter or 70 cents a share.
Compared to a net income of $187 million or 80 cents per share reported in the same quarter last year. This decrease is primarily explained by an unfavorable variance in valuation and translation of financial instruments, partially offset by our 7% EBITDA growth.
Adjusted income from continuing operations, excluding unusual items and gains or losses on valuation of financial instruments came in at $174 million or 68 cents per share compared to $142 million or 61 cents per share.
Reported in the same quarter last year. This 23% increase reflects the improvement of our operating profitability.
For the first nine months of the year revenues were up 2% to $3.2 billion and EBITDA was up 5% to $1.4 billion.
Adjusted income from continuing operations, excluding unusual items and gains or losses on valuation of financial instruments.
Came in at $421 million or $1.65 cents per share compared to $337 million or one dollar and 44 cents per share reported last year, a 25% improvement.
A backward media's consolidated free cash flow from continuing operation activities operating activities, rather decreased from 304 million in the third quarter last year to 205 million. This quarter explained explained primarily by an unfavorable variance in the non cash balances, partially offset by EBITDA growth.
As of the end of the quarter, our net debt to EBITDA ratio was 2.9 times down from 3.2 Times report at the end of the third quarter last year.
I would like to point out the success of our recent refinancing exercise, where videotron issued $800 million of senior unsecured notes in the Canadian market, yielding 4.5%.
This transaction represents both the largest offering and below was 10 year coupon ever achieved on the Canadian high yield market.
The proceeds have been used to repay drawings under videotron unsecured revolving credit facility, raising our available liquidity to more than $1.6 billion.
Since the renewal of our NC IB program on August 15th of this year, we purchased in canceled 1.4 million class B shares.
Since we initiated our normal course issuer bid program eight years ago, approximately 33.8 million class B shares have been purchased and camp.
I will now let Jonathan Sweat review, our telecommunications segment's results and operations.
Thank you again <unk> good morning, everyone.
This quarter was a pivotal quarter for videotron.
On August 27th we launched helix, our new technology platform that accompanies our customers connected lives through a digital ecosystem based on their Comcast Xfinity X one platform.
Helix offers enhanced TV experience through IP technology that is built around the voice control assistant technology, and which includes a seamless integration of when web content platforms like Netflix you too and Clopidogrel.
Helix also offers a smarter and more powerful wildfire experience and will soon welcome home automation services through our helix by application.
Market accepts the acceptance for our product is meeting expectation, so far and I want to thank our team and our partners who are deeply committed to this project and all the members throughout the organization for their support and dedication as we reached this important milestone.
We are also pleased to announce that videotron west Crown the coolest telecommunications company for second consecutive year among people between 13, and 37 years old According to delineate Qubec youth pole.
Turning to our third quarter results, we have recorded both solid operating and financial performance with a 53000, RG you growth and an 8% EBITDA growth.
How do we not REO track Rio retroactively, sorry applied RF our 16.
Our EBITDA growth would have been 10%.
Our wireless services performance remains impressive.
As of September Thirtyth, we power 1.289 million mobile lines supported by a growth of 57000 lines during the quarter 15000, or 30% to 37% higher than last year.
168000 lines over the last 12 months.
This quarter, we posted our best ever quarterly an LTM performance in terms of grow sides.
We reported service revenue growth of 13% driven mainly by solid subscript subscriber growth.
For an 11th consecutive quarter Videotron mall bio maintained a leading market share in terms of gross adds complemented by Fids, which allows us to properly address our total market.
As a result, we captured 30% of total gross adds in our market during the quarter a significant improvement over last year and the best performance out of the for operators in our market.
Despite our competitors move to offer throttle unlimited offers and the handset financing options.
Our outstanding performance demonstrates that stability and transparency remains better for the cut back market.
Consolidated wireless ABPU decreased from $53.28 front to $53.28, sorry from $54 in 28 cents recording a third quarter of last year.
Resulting from the increasing proportion of be why you would do customers in our total base, which once again, representing nearly two thirds of our new adds during the quarter.
Excluding the diluted impact of fifth.
As you and ARPU for Videotron mobile actually increased for the quarter.
Thanks to the relentless work of our teams over the last few months, our fifth mobile services platform has been reinforced tested and is now stable.
We therefore recently launched our new pricing structure for fixed mobile plans, which remains competitive despite the elimination of the stabilization discount.
Finally, our overall monthly churn rate continues to decline and now stands at 1.3%, thereby further increasing customer lifetime value. Despite our constantly going growing be why would the customer base.
Moving on to wireline, we recorded a growth of 17000 broadband customers during the quarter.
With broadband results are improving and already represent an interesting complement to our overall offering although brand awareness remains low at this stage.
As we continued to build this new bran fixed broadband results will further contribute to our growth.
And cable TV, we recorded a decline of 13000 customers in the third quarter and ask for cable telephony, we exhibited a decline of 20000 customers during the quarter.
Overall, our broadband and TV subscriber performance for the quarter was somewhat impacted by hour by hour installation backlog for helix.
In order to ensure a robust launch from a product back office and customer care perspective.
We purposely limited our installation capacity for the first for commercial weeks.
Carbide, resulting in a heavy backlog of more than 10000 scheduled installation as at the end of the quarter.
We are currently operating at full install capacity and we expect the backlog to be eliminated by the end of the year.
I was at the quarter 444000 customers subscribe to club Monaco hour or OTI video service.
We recorded growth of 13000 customers during the quarter and a growth of 41000 customers over the last 12 months.
Collaborate eco boast over 472 million viewings since its launch we risk recently announced 30, new original an exclusive predict productions.
Fiction series to documentaries comedy and teenage series.
Under financial front consolidated revenues amounted to $877 million in the third quarter compared to 855 million in the same quarter of 2018.
Revenues were up 3%, primarily due to RG growth, mainly in Mumbai and broadband services.
During the quarter, we recorded EBITDA of $468 million for a year over year growth of 8%.
Had we not restated 2018 financials for a RFS 16, EBITDA growth would have been 10%.
Service revenue growth and ongoing cost containment initiatives contributed to our EBITDA growth.
Our ability to maintain an industry, leading EBITDA margin of 53% without compromising customer experience demonstrates our continued focus on cost and our ability to leverage operational efficiencies.
For the first nine months of the year EBITDA grew 5% to $1.3 billion.
Our 7% had we not restated for I have fires 16.
For the third quarter, we generated $294 million and cash flow from segment operations compared to 276 million during the same period last year.
For the first nine months, excluding acquisition of wireless spectrum licenses, we generated 836 million and cash flow fund segment operations compared to 773 million for the same period last year.
Net capital expenditures, including acquisitions of intangible assets amounted to 174 million of third quarter, an increase of $17 million from the third quarter last year.
After nine months.
We expect total capex for the year to be below the low end of our guidance range, mostly due to some delays in deploying or LT advance fiveg already network.
For the first nine months of the year net capex amounted to $505 million, excluding the purchase of spectrum licenses.
Wireless capex amounted to 30 million in the quarter and $75 million for the first nine months I will now turn it over to France to review the media segment performed.
Net outflow.
Please move to recorded operating revenues in the amount of the 126 million in.
I want to ask 2019.
Year over year in decrease of one.
Yes.
Impacting revenues increased by 3% essentially you. TD addition, as operating revenues from the evaluations that channel.
Since the their acquisition on February 13, 2019.
In a 7% increase in advertising revenues for any other specialty channel, partially offset by a 4% decrease in TV network revenue under ratings front.
Our overall viewership market share each 38.3% up you will find two points.
On this.
2018.
TV network held its and number one position with a 23.6% market share.
While our specialty channels Anda and combined market share as at 14 point.
7% 0.3 points increase mainly view TD acquisition.
And if as.
Which continue to that positive impacts on both.
Our financial results and a range of our content offering.
TV for its continued to perform performed well with 0.4 point John in market share during that quarter.
As the end remained in most parts of their specialty channel in Quebec with 5.1.
Percent audience share.
Magazine publishing revenues declined 20%, mostly view TD to a 29% decrease in advertising revenues ended this continuation of debt obligation of Air, Canada, and Quebec magazines.
Last issues of which were released in May 2000, net and 19.
It's now revenues decreased by 13% due primarily to a 29% decrease in revenue from from stage mobile units and production equipment rental partially offset by revenue growth.
Visual effects doubling in sub tightly.
Our new production and distribution segment, creating.
Following the acquisition of ins and to handle on April 1st 2019 added to treat point 1 million in revenue for the third quarter.
TV groups EBITDA reached 31.1 million forward, it's terrific quarter, an increase of 3.1 million compared to the same quarter last year.
Our broadcasting segment segment reported EBITDA of 21.5 million as favorable variance of 4.5 million. The magazine, saying then reported EBITDA EBITDA of 2.9 million up zero point, Eightmillion, well, Matt Matt while males.
Segment posted EBITDA of 6.5 million 2.6 million lower than last year, our new production and distribution same segment added positive contribution of 0.3 million EBITDA to our quarterly financial results.
And then time month period, ending September Thirtyth TV group revenues amounted to 400.
6 million at 4 million increase our or one person year over year in essentially lead you to end the increase in our broadcasting segment. Following the addition of operating revenues.
From the Avon ends this channel as well as the addition of intended.
Our magazine business posted revenue decreased.
15% to 48 million four to nine month period, and mail recorded a 4% revenues decreased to 48 million.
TV group EBITDA amounted to 39 million forward, a nine month period at 10 million increase or 26% year over year.
Our broadcasting business reported EBITDA of 22 million, while magazines and males low reported EBITDA of 8 million.
Our new Brad production and distribution segment added 0.6 million to our group.
EBITDA.
Cash flow for Us from segment operation was 28 million for its third quarter and that improvement of 0.5 million over last year for nine month period cash flow from saying then operation amounted to 26 million 7 million higher.
Then last year due to our strong EBITDA growth, let me turn out to restore baskets.
Sure.
So long on the strength of our performance in this third quarter and as we enter the important last month of the year.
We will fare no effort to keep up the momentum to reach our growth and profitability objective for 2019, while remaining focused as ever on protecting one of our most valuable assets our hard earned reputation for delivering the best client experience in the industry.
Thus, maintaining our leadership position of the reference in Telecom News media culture and entertainment in Qubec I. Thank you for attention and we will now open the lines for questions.
Certainly and as a reminder, if anybody would like to queue up you can press star one on your telephone Ki bins.
And to move yourself from the Q you can press star to again that star one.
Q1.
And we already do have the couple of questions that have Q.
Just a wait a moment for a few more here okay.
Okay sounds good so our first question will come.
From a Jeff fan.
Please hold bone.
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Thats right vacancies I knew that there is.
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Thanks.
Okay.
Alright. Thank you Jeff. Please go ahead.
Thank you can you hear me Okay, Yes, we can now all right.
Finally, I guess.
Moving onto 2000 homes or.
Jeff you, maybe the only when we ever here, So Gogo, Florida, [laughter], maybe I guess just ask all my questions.
Okay, let's start with let's start with ARPU.
Jeff I think you talked about the transition of the pricing.
To take away some of the.
Transitional ores stabilization discount that youre granting earlier.
How should we think about that as you as we look at the ARPU ARPU growth trends.
In the next few quarters or even good looking out to next year.
And then the second question is this related to.
The margins I think in the quarter I'm very strong.
Operating margins EBITDA margin across both looks like cable and wireless wondering if he can talk a little bit about the sustainability of some of that margin improvement to the.
The percent growth this quarter sure.
I'll start with what ARPU.
So on October 17, we Oh, we with through our stable Ajay stabilization discount that at fifth since the platform is not as it has been tested and is now stable.
And end the discounting was about 30% so the discount as now disappear.
That that being said you know obviously, there's there's been some impact on our subscriber base and growth at a at FIS. Following this this price increase.
But the good thing is is mostly to the benefit of videotron. So overall when we look at our subscriber results for the month of October were well in advance or compared to last year, even though you know.
This is a results were lower than the previous says PV previous week sort of for the weak spot preceding the the price increase.
In terms of how do we see it going forward, obviously through the stabilizes the stabilization period, we haven't really had the chance to you know two to balance the pricing structure for videotron mobile and fees and you know to make sure that we maximize our growth. So we will take the next few weeks to do that so we.
Might be playing with the pricing structures that are in there.
That being said.
Two thirds of or the net ads our view why are you with the including phase. Our overall subscriber base is not up two thirds being be why you would the it's lower than that so.
Since even following the elimination of the stabilization discount.
The the prices a phase is lower generally done then videotron I think thats you know up until we reach that that balance in our overall subscriber base. We will continue to see some dilution on on ARPU, but I would expect that being lower.
Because the prices that fit our no higher than they were before and on a year over year basis.
I will try mobile is seeing inbound ARPU and ABPU going up both on the be widebodies be why would he side and the subsidized subscriber site.
So you know, it's it's really a question of reaching that that balance in our overall subscriber base with a with fees, which as you know price at a lower price.
In terms of the EBITDA margin, yes, that's true we have a we had a very strong EBITDA margin in the quarter.
We have the we had a contractual obligation.
On which we worked for a while to restructure which we were successful in the quarter, which will generate a future you know ongoing savings, but also really resulted in the and the reversal of a portion of our liability related to that obligation. It's an operating obligation obviously.
And it's resulted in a in a gain.
And the most important thing to note is that even though we take out that gain.
We would have beaten the consensus EBITDA by you know a material margin.
Can do what was the what was the size of the game.
The size of that gain was if we take out the gain we would have beaten the consensus EBITDA by a material margin that's tied to the game.
Okay, Okay, and just and if I can complete I'm, sorry, Jeff I'm going to complete with respect to a wireless versus wireline margins.
You know, we've seen and you know obviously as a as lifetime value for subscribers is increasing and we don't have obviously too to subsidize the customers to be why you would do customers under churn is going down obviously, we expect that at some point, we're gonna be we're going to see some acceleration in terms of wireless margins and I can tell you that in Q2 it occurred.
Just a quick clarification on the third Dol on the price change on says does that apply to just those I worked in your fizz base or were those applied only to new customers coming in and applied to mostly new customers coming.
And when do you expect the are the ones in the base to actually start to.
Pay full price.
When I when they're going to change their packages.
Okay.
Okay I'll pass the line. Thanks. Thank you.
So the question please.
Thank you our next question.
Comes from.
David Mcfadgen. Please go ahead.
Hi, Yes, a couple of questions.
On wireless.
So in the past you talked about being able to move.
<unk> de customers.
To a higher ARPU when they got a new device or are they ran out of their existing contact and it's just wondering how that is going.
Got it goes it goes well yeah I'm you know that so you know obviously, that's our goal to at some point well our goal is to keep our customers.
Period.
So whatever whatever ways. They wanted to stay with US you know honest subsidize a.
Package or staying on be widebody Arctic our goal is to is to keep our customers and were very successful at a doing so as I said, our churn rates are going down so on a on a sequential basis and on our year over year basis basis. So it's a I you know I think that we have the right offers in the marketplace.
Yes.
That to you know we have value add that you know our subscribers are happy with you know talking about cubicle mobile is a very very good example that say that's unique and it's it's a one way to differentiate our offers a you know obviously the bundle discounts and whatnot. So there's many many things that we have available for our customers and we offered to our customers too you know to maintain.
In our relationship with them and were very successful at doing so.
Is he is the ARPU laughs.
About $7 when you move someone up on average I think that's what you indicated the past just wondering.
And that's probably a bit more linda.
Okay.
And then just on says I I think initially when you roll. This out you know the EBITDA margin was lower than videotron.
Brand, but it doesn't seem to be impacting EBITDA margin at all.
EBITDA margin continues to grow so just wondering where you stand lesser sector.
We have a margin we have a you know I would say these well the last two quarters, we had a I would say.
On a year over year bases that lease.
We have a double let's call. It has doubled positive on the EBITDA margin you know obviously.
With the churn rates going down and not having to subsidize our customers under be why are you with the.
New adds a you know in proportion of the total base is growing.
Obviously have a positive impact on on the wireless margins.
But on top of that when we started fizzy year ago fees was losing money. So obviously dilutive to our EBITDA margin and nurses Fizzes is becoming profitable in fact in the third quarter, we were profitable.
We were breaking even in Q2 or slightly positive, but now we're certainly into positive territory and it should continue to grow as we grow base. Our subscriber base. So I think we have a and that's probably a you know and that explains why we've seen an acceleration in Q3 in terms of EBITDA growth.
So if I continue along with that thought that would imply that going far enough since continues to grow and profitability. It's kind of left to total EBITDA margin now.
Well, it's a if you do the math correctly I would agree with you David Okay all right.
So just let me on 10, they cable TV sub losses, they were up quite a bit this quarter versus the prior years. Just wondering was there any thing unusual that might account for that this quarter I think.
What I would say here is I I think thats, our prudent approach with respect to our.
Launch of Vili acts as I was definitely somewhat impacted our wireline subscriber growth like like I said previously we at the end of quarter, we had a installation backlog of more than 10000, we expect that this backlog will be a mill eliminated bye bye.
End of the year, so that should contribute to a better performance on a on wireline, both TV and ER and broadband I would say.
Okay.
And then just lastly, if you could give us an update on where the Capex is expected to finish for 2019 I don't know if you can comment on 2020.
Well.
You've already common already I already commented on this year, so top 2019.
We will definitely be lower and on the low end of our guidance or a range. Our guidance was for the year $725 million to $800 million. So we'll be lower than 725 because of the delays a the delays that we experienced and the deployment of our fiveg or LT.
Advanced Fiveg network, and obviously that means that next year, we're going to have to recover a those delays and and we'll probably see well it will definitely see a spike I would say next year in terms of our Capex, but <unk> you know I would say inside our usual annual guidance that we provide to destroy.
Right. So you know I wouldn't not it's certainly not expect that to be higher than 800 million.
Okay.
All right. Thank you.
Okay. Thanks, David They Didnt next question.
Thank you our next question comes.
Comes.
From a.
I hear Yankee of it do you try today. Please go ahead.
Thank you for are getting me in the skin in the Q.
I wanted to ask what are the delays for the rollout of Fiveg relate to two and.
Just want to trying to figure out what's driving that pushed into 2020 from 2019.
And so it's related to our RFP for the radio access network, we experienced delays.
While we weren't doing RFP. The RFP is mostly completed so we should be.
To be able soon to conclude on the RFP and Thats a dozen this that's primarily the reason why we experienced delays.
So so should we take from this that you're.
You know you discussed in the past there are two options out there for you.
Either doing in network sharing agreement or.
Going out at the alone can we conclude from from this the tool.
You moved on and.
You are doing this on your on.
No. We do you you you cannot conclude that okay, but but obviously.
The not the terms what the structure of the any type of sharing with our partner.
Is under discussion now, but you know obviously, even though we're sharing you know the network we need we need radio. So we know we needed to do RFP anyway, but but we aren't movement no matter, what if a if we don't get any agreement on whatever a whatever structure. You know we are in movement I will will proceed.
Yeah of course, so when you talk about your 800 million dollar ceiling in terms of Capex.
Is that then for 20 point is that the under the assumption to.
Go at it alone or with a partner.
No matter, what because you know if we share we're gonna be sharing 50 50. So you know it's really I don't think that though the early years are impacted by their Sherman.
Okay, so either way it should be below or 800 Max.
Okay No one when you look at.
The pricing in the markets in the wireless it has been quite fluid over the last few weeks, we've seen pricing on unlimited plans and come back goal.
60, 575, then going back to 65.
And the last couple of days by the by the incumbents can you talk about what you're seeing in the market in terms of pricing and.
We've seen you significantly take a different.
Marketing.
View on these unlimited plans you you're.
Offering bigger buckets and stuff.
Going at the same kind of marketing.
It does the incumbents.
Are you seeing more pressure less pressure.
HM are you seeing.
Bush to subsidize more in the market or less can you talk them, but maybe you just on that front. Please yeah in terms of.
Well I think that going to unlimited was was definitely too early from a you know from from the Indian convince and I really think Thats, you know the way to limit consumption.
With that they've chosen travel or trawling is not the right. It's not the right thing to do because it didn't pass customer experience too you know a too much.
You know when when Youre consuming I think I said that a the previous quarter. When you were consuming and no big data buckets for for multi media consumption.
When you when once you get struggled your experiences so bad that you don't like it and so you know our view is that going unlimited is not the right thing to do we prefer offering bigger data buckets knock on limited, but bigger data buckets price you know very competitively Ah and in fact, I I don't know if you're aware, but we have lunch.
A few days ago, I think something that was going to be very powerful in the and the marketplace, which is a some sort of in insurance in terms of overage for our customers. So it's a 100 gig hundred yeah, yeah exactly available over one year and once you hit your your data cap on a month you can you can go.
To your one gig basket and use the one gig basket you know right without paying any over it. So it's a it's a different way to approach the market, but it's always a full speed. It's always provide the best customer experience or the best client experience and I think thats, what they could backers, one and you know I'm.
Beating our previous year by a 37% on subsides and you know with the month of October that we're seeing right now although we've seen a you know I think that's worth chosen the right to the right strategy and in terms of in terms of a subsidies and financing option. The you know I think you know for us subsidies and B.
You do you obviously remains our our strategy. So we're not very heavy on subsidies. So I don't think that we are impacted or hurting ourselves with respect to the level of subsidies that would provide because or or or strategy is very much focused on be waiting okay.
Okay and my last question Jay upon on.
Regulatory side, how should we handicap.
Regulatory environment, right now and kind of when you look at it versus previous years.
Argue inclined to be less or more I'm worried about how things are happening or taking shape in a in auto on that front.
Yeah, well, let me put it this way.
What roommate, what prevents me for sleeping at night, its regulation, because I don't control it.
So you know obviously, what we're seeing from this from a you know the regulatory bodies, including this your RTC I'm very not please was that and we're going to you know in terms of some decisions as has been that's been announced or taken by this year. A D.C., we will will fight as hard as we can but a you know.
I think that I don't control.
You know I'm I'm always concerned about.
Because it making you delay or some of the rollout of Fiveg. He is that there are those decisions coming upon on the wireless affecting your decision taking decision making activities on on investing in Capex Oh sure, we're disciplined investors and if the rich.
Turn is a is a is impacted by some regulatory decisions. We're gonna have to take our decision and in fact I can tell you that we have already taken some decisions you know, we've we've announced a two dusty RTC end to end the resellers and our retail customers that we are withdrawing the one gig service, we will no longer offer the one gig.
Service because it requires investments and you know with the new regime, we cannot afford it. So you know where we have to take decisions. We've taken that decision. It's a it's probably in the first the you know the most material one that was a that we've taken so far but you know it's going to be followed by others.
Okay. Thank you.
Thank you.
Okay. Thank you our next question.
Pardon me our next question.
Comes from a mass you Griffitts of Bank of America. Please go ahead.
Yeah. Thanks for taking the question I just was wondering with the launch of those are 100 gig buckets that people can dip into to avoid the overage just what is your exposure to a overage revenue right now and we know kind of across the industry. It's around 5% to me interest I would be interested to hear kind of where where you are sits in real.
Nation to that and then separately with helix I know, it's early but maybe just talk to your expectations about what you expect to see I'm on the Internet revenue fronts from customers that are migrating over.
Just in the early days and and maybe as we go into the rest of the year. Thanks.
In terms of a overt revenues I you know obviously, it's going to have an impact, but our bucket was our buckets. Those are already so big that I don't think that's you know the impact is going to be that material and on top of that.
The 100 gig that is available there are some limitations on a monthly basis. When you cannot take to 100 gig on the first month. So we have some caps on the 100 kicks as well so some limitations to prevent the excess use it just with that way. So I don't I don't expect any any material impact with respect to overage revenues.
In terms of a in terms of helix I'm not sure I understood the question correctly, but well I'm.
Assuming that you're you're expecting a a like a bump up perhaps in the packages that people choose for internet, perhaps not but that's what's that was the premise of my question I'd be interested what you're thinking it's gotta. That's okay I understand now the question well.
I think there's a I think there's a.
Potential positive impact of a of helix on the on Internet because as you know the TV is its its IP TV platform. It's powered by the wife I and it has the potential of Ah you know having people migrating to bigger packages all higher speed packages.
Because of you know now that the link that there is with TV.
So I think there's the potential for that in terms of the results. So far you know I couldn't say I don't have the you know by hard with artist statistics, but I I definitely think there's there's there's the potential for that and.
If you look at a you know at least what we know a on a in the public domain from a Rogers results on a on broadband following the introduction of a the X one platform.
I think it's very positive so so I'm I'm very enthusiastic about the future of a the broadband service.
With with our helix platform.
Alright, thank you.
Thank you.
In Q.
Your next question comes.
From Vince Valentini, Oh, the TD Securities. Please go ahead.
Yeah, Thanks very much.
First off given somewhat cryptic answer on the the gain within a few telecommunications EBITDA. This quarter can I just make sure we're all level set.
What do you think consensus was because I've seen different numbers out there are using the 453 million dollar number that.
Growing team distributed.
Yeah, that's correct. So that's the one that I have yeah yep, okay, great. Thanks.
Second.
I should have said funded and 75, but [laughter] the.
There's talk of club will it go I think you said tripling the amount of investment in original Qubec productions for.
This year or next year.
Does that mean, there could be like a spike in content costs that are that.
If you talk to offset or is it still a pretty small immaterial base that you're talking about yeah, it's it's pretty small, but but but obviously when youre when youre a amending the proposition in terms of a in terms of content.
There's there's going to be you know some increasing cost that's the that's for sure that being said the one thing that we.
We realize overtime is that Oh, yeah, the well I don't know if it's only true for to get Becker's I don't think so because it's I think it's the same kind of trend with Netflix, but you know there's a there's a tendency from a from the population to look for documentaries. So were really beefing up on documentaries and as you can expect it's not it's not there John readout is.
Costing the most so so yeah in terms of a a in terms of content. We will the augment it was gonna have an impact on cost, but it's it shouldn't it's not material.
[noise] you are you able to leverage TV production capabilities in any way in doing this or is this all third party worked it no no no no. It's always you know you know our model is convergence and when we talk about convergence, we talk about everything.
So obviously in terms of content production.
And content generation it also.
Lays out the you know quite significantly in pockets are based on the convergence model that we've been obviously you know working on for so many years and chosen.
It is able to deliver success.
You would the talent.
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Enable you to get from our content businesses.
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Last one for me it.
Jeff It if your data buckets are shown big.
And you don't want to do on limited and you think giving 15 to 20 gig data buckets is the better alternative.
100 gig top up opportunity can you help me think through when Fiveg finally comes and people start using a lot more data how do you monetize that when the average person can already huge call. It 20 gigs a month without paying anymore.
Oh, that's a well that's it that's a good question you know, obviously I think that would fiveg or you know people would consume more there's no doubt about that the you know with speed the with so much speed being available to customers. If they don't have the potential for increasing the you know the data the data usage and obviously our.
Our marketing offers on promotions and whatnot will will reflect that but a you know at this stage, where you know we're working with.
We're working with a the network that we haven't there the delay the layers that we have and and I think we're quite successful and that's what that's what counts for me as as we speak.
Okay. Thanks.
I think that over the last question.
Yes, we have a one last question into Q.
And that would be from drew Mcreynolds of RBC. Please go ahead.
Yes, Thanks for squeezing me in a one a different question here.
Obviously, you guys have a good capital return program in place, but dividend growth target and or payout ratio target in the buyback.
Can you just give us an update on where you stand here on M&A opportunities.
Current asset mix or you are you happy with it.
Happy with the geographic exposure here.
Are you intent content just investing the convergence model any update there pure Carl I guess, maybe starting with you would be great.
AH, Yes, you know a on the M&A side, the you know.
No. That's the culture of this company that always you know to be opportunistic and we will continue in this direction.
Therefore, I think that.
As you know we've been always discipline I like in fact, you know when there's no honestly I mentioned this also [noise].
Speech or answering questions. This is something that you didnt modeling for the last in 20 years.
Well, it's something that the market recognized or anything we had a good description of that.
When we launched our.
The reason the bond refinancing so we will continue to look forward in this direction.
On the geographical side I think that you're right that manages the you know we would like to grow elsewhere.
Its a matter of opportunity and as of today, we have nothing to announce but.
We will certainly continue to be opportunistic.
Guidance I just gave it to you early.
Maybe you you [laughter] answer you know the.
Your first question.
Well I think it was it was a it was part of that as well right. There was a you know how much how much we the we'd allocate capital to M&A, where were you looking I mean, it's up and I I think I'll just add to what sense what their Karla said you know we will continue to be opportunistic obviously the return is much more interesting for us if it fits within our eco system in.
In Qubec and feeds our convergence model that being said you know we will if there are opportunities outside of Qubec I'm pretty sure we'll as long as it is a an accretive and interesting deal will we'll have some interest looking at an.
Absolutely I don't worry Vince will we're not going to over bid on trends that [laughter]. Thanks very much.
Thank you very much so grew at the next that conference call at the nice thing.
Thank you everyone.
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