Q4 2019 Earnings Call
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The conference is now being recorded.
[noise].
[noise] good morning, ladies and gentlemen, thank you for standing by welcome to the <unk> Inc. Conference call I would like to introduce you can see mop.
She's financial Officer of Canaccord, Inc. Please go ahead.
Ladies and gentlemen, welcome to this can be called conference call. My name is big smell I'm, the Chief Financial Officer.
And joining me to discuss our financial and operating results for the fourth quarter and full year 2019, Rps help it I don't our president and Chief Executive Officer, John So if we know president and CEO of video at home and functions, Yes, President and CEO of TV a group.
We'll be able to listen to this conference call on tape until June. The 11 2020 by dialing 877 to 9381 Threethree Conference access code for AIDS 006 Dash and play back access code for 806 006 dash.
This information is also available on cubicles website at a double or triple W.W. They call Dotcom I also want to inform you that certain statements made on the call today, maybe considered forward looking and we would refer you to the risk factors outlined in today's press release and reports filed by the corporation with regulatory authorities.
Let's now start with our first speaker guest count did I Miss you again, a good morning, everyone.
Oh, revealing the year 2019, I'm very pleased with our financial and operating performance as we posted a 6% or one or 3 million EBITDA growth for the year and a 7% EBITDA growth in the fourth quarter, continuing to outperform our fears and competitors.
In addition, we generated more than 1.1 44 billion dollar in consolidated cash flows from operation for the year, with which represents 132 million or 13% more than in 2018, and our best performance.
Sure.
In light of these a favorable results and the following our applied to gradually increase dividends to represent sorry, 30% to 50% of our net free cash flows.
I am happy to report that get back or board of directors declare yesterday.
Quarterly dividend of 20 cents per share on both class eight and class B shares up from 11 at a quarter sense, a 78% increase.
As always our telecom segment delivered solid results in 2019.
With 5% annual EBITDA growth.
Probably by the continued momentum from our 100% digital Brian Phys and the launch of Ilecs, our new IP TV and broadband platform.
With our recent launch <unk> wireless services in the room Whiskey region, and our acquisition of dealing seems Joel I must indeed Abitibi region.
We don't talk further reinforces its position as the number one telecommunication company in Quebec.
On the regulatory front, we are happy with the I said recent announcement of set aside provision for regional players in the upcoming 3500 megahertz auction.
With wireless prices, 35% to 40% lower and come back then in the rest of Canada get back or and if you do a tall are clearly demonstrated the impact and value created by regional players.
[noise] de infrastructure based model is working well also we must stay the course and continue.
Delivering value performance and service for the consumer and go back and Canada [noise].
Our media segment also delivered outstanding result in 2019.
With the acquisition of engine Dopants, Joe and distribution capabilities. The if as you know ends this specialty channels.
Along with continued tight cost management.
The media segment generated higher revenues on an impressive 15 million EBITDA growth in 2019, well go any our maintain its leading position as the most watch network and go back [laughter], 38% marketshare.
In this regard as deviate.
Almost all of his distribution agreement with the notable exception of Bell with everyone recognizing the fair market value of our channels.
I will repeat that is now imperative that bell finally accepts the fair market value of DVR stall and all our other specialty services.
Finally, our sports and entertainment segment continued to grow with 97% 97, cultural and sporting events present, [laughter] sounds do it all in 2019.
Offering evermore diversify and profitable events.
Successful and widely attendant shows such as set out some produce in collaboration with the second awards, which sold more than 75000 tickets as well our partnership with picnic electronic igloo Fas and other popular events in the Montreal area are further positioning.
Yes, as the for their creation production and distribution of light events and entertainment content into back.
Whereby feeding our multiple distribution platform within that get at all.
I will now let you.
If you are consolidated financial results [noise].
[noise] Mr discount.
For the fourth quarter go backwards revenues were up 5% to $1.14 billion and revenues from our telecom segment grew 5% a $909 million.
Go backwards EBITDA was up more than 7% of $495 million or did it come segment recorded a 6% EBITDA growth to $463 million, while our media operations reported EBITDA of 35 million.
Improvement a $7 million over last year had we not decided to restate the impact of I FRS 16, retroactively EBIT EBITDA growth for cut back or in our telecom segment would be 10% and 9% respectively.
We reported a net income attributable to shareholders about $145 million in the quarter or 57 cents per share.
Paired with a net income of $119 million or 46 cents per share reporting to the same quarter last year. This increase is primarily primarily explained 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 $160 million or 63 cents per share.
Compared with 133 million or 52 cents per share reported in the same quarter last year. This 20% increase reflects the improvement in our operating profitability [noise].
As of the ended the quarter and the year, our net debt to EBITDA ratio was 2.9 times down Fung from 3.2 times reported at the end of the fourth quarter of last year [noise].
And similar to our telecom peers.
For the full year revenues were up 3% to $4.3 billion and EBITDA was up 6% the $1.9 billion.
Adjusted income from continuing operations, excluding unusual items and gains or losses on valuation of financial instruments came in at $581 million or $2.27 per share compared with $470 million or $1.96 cents per share reported last year, a 24% improvement.
Our consolidated cash flow from operations for the year or 2019 increased by 132 million or 13%.
$1.144 billion, our best performance ever.
Available liquidity of more than $1.7 billion as of the ended the year and our growing cash flows will be more than sufficient to fulfill our commitments and fuel our growth.
And 2019, we repurchased and canceled 3.1 million class B shares since we initiated our normal course issuer bid program nine years ago, approximately 34.2 million class B shares have been purchased and canceled.
I will now ledge Allfast will review, our telecom segment operation.
Thank you again, good morning, everyone not [noise].
So before we start operating review I'd like to go over some of the significant events that I highlighted and 29 team [noise].
It was truly a remarkable year forward or tron.
Filled with accomplishments initiatives initiatives that strengthen our position as one that's kinda does leading telecom companies.
As you know during the year, we launched helix, our new broadband video and home connected technology platform that is based on their Comcast X one platform.
So far wheel. So far we are pleased to count as of today more than 190000 broadband and video RG use on our next generation platform and only six months of commercial service.
In 2019, we have also partner with Samsung Electronics school for the deployment of our LT advance Fiveg radio access technologies and get back Andy Outerwear region that we will gradually rolled out starting and twentytwenty skeletal.
Finally late in the year, we concluded an agreement to acquire did it seems you know I must right. After this year or do you see ordered Cablevision bell to provide us with wholesale internet access and avoid invited off.
These two developments will allow us to expand our service offerings in the EBIT to be region and further strengthen our leading position in the problems have come back.
Today I'm very pleased to announce that we connected our first customer and I must last week clearly showing our commitment to compete in this region for the benefit of the EBIT to be population.
We continue to meet our strategic and financial performance objectives, all while focusing on focusing on delivering the best experience to our customers and employees.
Throughout the year, we received numerous distinctions some of which we are pleased to share with you today.
We are one of kinda desktop 25 employers according to Medio Corp., Canada, and the best employer in the Prime and just get back based on India.
We are also one I've got us top seven top 70, greenest employers again, according to mediocre Canada.
And finally for six consecutive year, we talk to Ipsos and full price index as the most influential in bran and to come back telecom industry.
[noise] turning to our fourth quarter results were pleased to report both solid operating and financial performance with a 5% growth in revenues and a 6% EBITDA growth.
How do we not real truck retroactively applied RMR 16 to our 2018 financials or EBITDA growth would have been 9%.
For the full year, we exhibited revenue growth of 3% and they've been D. A growth of 5% or 8% how do we not retroactively applied for 16.
[noise] our performance in wireless services remains impressive.
As of December 30, Onest, we powered 1 million 330, 31000 more by all lines.
Fueled by a growth of 43000 lines during the quarter.
9000, or 27% higher than last year.
On a growth of 177000 lines over the full calendar year.
This year, we posted our best ever annual net adds performance since the launch of our facility based mobile services in 2010.
We reported year over year service revenue growth of 13% and the fourth quarter, driven mainly by solid subscriber growth.
Boy its third consecutive year, we let the market in terms of share of gross adds fueled by the success of our new mobile service fears and overall recaptured just shy of 30% of gross I had in our market during the quarter.
We have recently launched our mobile services in the game Whiskey region are very good news for the consumer isn't this region, who will now enjoy lower prices and the best customer experience.
Consolidated wireless HBP, you decreased to $51, a 99 cents from $53.25 recorded in the fourth quarter of last year, resulting from the increasing proportion of fiscus dimmers and our total customer base.
Overall overall view why your with your customers, including fees represented nearly two thirds of our new adds during the quarter.
More importantly, HBP you an ARPU for both fifth and videotron more by actually increased year over year and I talk about India.
Finally, our churn rate continues to be well under control as remains stable year over year at 1.3%, Despite our constantly growing noncontractual customer base.
Our marketing tactics continue to focus on to be why would you segment as would prefer its cash flow and lifetime value profile without having to compromise on churn thanks to our content customer experience and bundling competitive advantages.
Moving onto brought that we recorded growth of 3000 broadband customers during the quarter and 23 dropped a thousand put a four year.
As I previously mentioned helix exhibit strong growth as we now serve more and on a 100000 broadband customers and less than six months of commercial service.
Video services declined 13000 customers in the quarter as consumer awareness for helix and its advanced functionalities remains at it infant stage, but we are confident that the strategies and tools at our teams continue to develop on var on various communication channels will bear fruit over to future.
We are however, massively migrating customers from our legacy platform to helix, which is clearly beneficial to trend statistics and cost reductions.
As of quarter 459000 customers subscribe to Clopidogrel, our or de video service.
We recorded growth of 16000 customers during the quarter and 38000 over the last 12 months.
In December we launched lafite.
And the original series shot in the far north of Qubec, which broke viewing records in its first week and he is already attracting interest from international markets [noise].
On the financial from consolidated revenues amounted to $909 million in the fourth quarter up 5% compared to the $866 million recorded in the same quarter of 2080.
Our low margin equipment installment program for helix contributor to this group.
For a four year, we recorded revenues of $3.5 billion.
EBITDA amounted to $463 million into quarter, four a growth of more than 6%.
While we recorded a bit de of 1.8 billion for the year for a 5% growth.
Again, I do we not restated 2018 financial for IPH, our 16 immediate growth would have been 9% for the quarter and 8% for full year.
Our ability to maintain industry, leading EBITDA margins of 51% without compromising customer experience demonstrates our continued focus on costs and our ability to leverage operational efficiencies.
For the fourth quarter, we generated $282 million and cash flow from segment operations compared to 245 million during the same quarter last year.
For full year, excluding acquisition of wireless spectrum licenses.
We generated more than $1.1 billion and cash flow from segment that operations for a growth of more than 100 million.
Not only are we focused on EBITDA growth, Bob, but our rigorous management of Capex also proves to be supportive to our cash flow growth.
Net capital expenditures, including acquisitions of intangible assets, but excluding wireless spectrum licenses amounted to 180 million in the fourth quarter.
Full year net capex amounted to $685 million, excluding the purchase of spectrum licenses.
13 million lower than last year.
And the decline almost entirely or realize into fourth quarter as we prudently decided to put some capex on hold in light of regulatory uncertainties.
Wireless capex amounted to 37 million into fourth quarter and $112 million, what a four year.
And twentytwenty, reflecting the added potential pressure on our business model coming from ongoing uncertainties around the regulatory environment. We have further reduce our capex plans for the year.
As a result, we now expect to spend from 625 million to $700 million in Capex for the years, including our multiyear L.D. advance Fived, you're ready network investment program, when excluding wireless spectrum licenses.
From the 3500 megahertz auction schedule for the end up 2020.
I will now turn it over to France to review the media segment performance [noise].
Oh Wow.
Did you Young group recorded operating revenues of 164 million in the fourth quarter, I said 2019, a year over year increase us, Turkey, <unk> point 7 million.
Broadcasting revenues increased by 8% essentially due to the addition of evaluate and just the channels since the acquisition on February 2019, I pointed you had reached <unk> I just need to subscription revenues at 4% increase in the other day.
<unk> revenues of the other specialty channels and then one person increase in TV on networks advertising revenue.
The ratings front Didier network LD its number one position not with a 23.3% marketshare.
The addition of de Erazno and zest channels assets at the decrease in their combined market share.
Existing specialty services and maintain the total market share our specialty services at 13.5%.
This acquisition continues to have the positive impacts on both our financial results and the range of our content offering.
As Dan remained the most button popularized specialty channel in Quebec, with a 4.8% audience share for as far as far as 2019.
Magazines, probably seen revenues declined 24% due to the decrease in advertising subscription and newsstand revenues at <unk> on a comparable basis and the sale of the publication of Air, Canada, and and Keybanc magazine the last issue.
I've, which were released in May 2019.
Now revenues increased by 24% you Didnt see higher revenues from all segments activities, including at 12% revenue increase from some sage my by doing it and if women are on time.
And that's a 82% increase in visual effects.
A 17% increase Infosight action.
Our new production and distribution segment created following the acquisition <unk> and <unk> handle on April 1st 2019 added 6.8 million in revenue in the fourth quarter.
TV it moves EBITDA reach dirty treat point Sixmillion for the fourth quarter, an increase of 7.7 million compared to the same quarter last year. Our broadcasting segment reported positive EBITDA of 21 point point Threemillion at favorable variance of four points.
7 million, our magazines segment recorded EBITDA US 2 million Domino 1.3 million well metals segment posted EBITDA of 7.8 million 1.8 million I are done last year.
Our new production and distribution, saying man made it positive contribution of 2.2 million to Ebitdas for our quarterly financial results.
Florida full year TV group's revenue amounted to 570 million and that 18, Marianne or tree person increase year over year broadcasting revenues increased by 4% to 436 million essentially you to do.
To a 12 person revenue increase from from our specialty channel.
Magazine publishing revenues decreased by 17% to 64 million you to a 25% decline in advertising revenue.
16 for some decline in subscription revenues and a 10% decline I'm in new sensor Binions <unk>.
Now revenues increased by 4% to 71 million and our new production and distribution segment added Turkey million to TV groups revenues.
TV group recorded EBITDA of 72 million.
For the year up 18 million or charity treat person from last year as our broadcasting activities EBITDA grew 53% to 43 million magazines EBITDA increased by 10% to 10 million and new production and distributor.
Sensing and added 3 million to EBITDA well, while my emails EBITDA declined by five person to 16 million cash flow from saying then operation was 28 million for the fourth quarter and improvement. That's my 5 million over last year for to full year cash flow.
I'm, saying men operation amounted to 54 million 12 million I heard them in that 2018, meaning do you mainly due to our EBITDA growth did meet your turn to refer back to Pascal, Yes people, who Uh huh.
So looking forward them, our our operations are well position to continue to deliver superior financial and operating performance and 2020, while pursuing investment and strategic initiatives that will support our long term growth and success.
As we have clearly demonstrated in qubec by investing billions of dollar and network and services. We believe in competition in a facility based competition that produce true sustainable benefits for consumers and we are counting on the CRT D C to pursue targeted regulatory measure.
There's that enables such competition and lead to a stable and efficient regulatory environment promoting investment and.
Innovation.
Oh, the Corona virus important issue.
I would like do a repeat what we stated in the press release on page four.
We mentioned that the corporation is monitoring the situation with their Colgate 19 virus and taking the 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 worsened and come back as I declare in the press release. So I. Thank you for your attention.
And we will now operator take a you can open the lines for questions.
[noise] [noise] [noise] all right, so just to remind everyone.
To ask a question.
You can press.
Star one.
And.
We have a few queuing up.
First first question comes from Matthew Griffitts from.
Bank of America.
Hi, how are.
Go ahead.
Hi, Thanks for taking my question.
So I wanted to ask you on the 2020, a capex guidance I think last quarter. Yeah. It was mentioned a that some of the that the delay in Capex was gonna be made up in the future. So is this you know current kind of reduction all year over year, something that you're viewing as a delay.
Okay, and the spending and it will likely get spanning 2021 or is this a costs, reflecting kind of regulatory environments and kind of along with side. Just curious if you could provide maybe a some sort of split at a high level.
With you know why wireless and you know the rest of the business.
Oh that you have before and you know sending the Oh.
The question too.
Theres Ahas Wow I think it will be important you know just to repeat or to reemphasize. The fact that.
Yeah. The the last decision being taken by this year do you see regarding terrorists two to <unk>.
I have been certainly quite a quite an event quite a moment and the telecom industry as as you saw you know all the companies all the incumbent operators.
While they've been investing billions of dollar in the network throughout.
The last decades have been able to offer the Canadians the best product and the best services.
And this is certainly something very important for for Canada. We've been seeing you know <unk> countries that lack and investing in a there and their network and providing not you know the sufficient quality in terms of of internet or hurting the productivity of of there.
Country.
I hope this is something that the government.
We'll consider or I will reconsider and as you know they've been a tree.
Consideration being taken all the companies are in front of the court right now to.
Argue regarding the this.
That decision.
Lets call it a bad decision.
There's also an appeal to the cabinet and the CRT. She is also.
Regarding reconsidering their own decision, so I'm not saying that all of this is related to this decision, but as those allfast, what Matt mentioned earlier that create uncertainty regulatory wise and then therefore, we need to be prudent.
Our expectation is that well.
The back and a more rational environment and then therefore.
Considering what our capex expenses, it could be and the future of us what annoying to fall yeah. The only thing my thought I would add is a you know for US we see all the regulatory measures being a being tied together. So you know we talked about the TTR your decision another resellers decisions.
The terrorists there the NVNO days coming out of the decision is coming from this year I do see which we don't know where as you know the CRT. She is going to sit there is a there was this announcement last week about the 25% a price reduction objective for the victories on what's gonna be then back on a you know in our market although.
No. We don't think this guy who's going to have a big in fact, but you know it's still it's still there you know up for speculation. So all that all that to say that you know as a rational and crude on investors will look at our you know.
Investment program, and we think that we have to pull back on some investments.
You're probably aware of that we've we've pulled or you know one gig service out of the market and obviously, because we cannot afford to investment that are associated a you know to that kind of service.
So that's a reflection of the uncertainties and and if things stabilize in the future. Yes, we might reconsider you know those investments, but at this stage when we're not.
Thank you Matt you next question. Please all right next question comes from a David Mcfadgen from Cormark [noise].
Please go ahead David.
Hi, a couple of questions I'm.
So first of all just on the wireless side can you give us any sort of ideas to.
How the net adds are coming in are they you know in terms of representation between sales and a the videotron Brown and then maybe also give us an idea on the EBITDA margin between says in a primary brand. If you if you could.
Yes, well first of all David when you.
We will not the school the split between the fears in the if you were talking more about customers you know for US you know it's a it's it's the friends or you know segment of the markets you know, it's a different marketing strategies.
But we see you know our pricing structures and whatnot and combination you know call fall for one to the other or in combination bought into the other so.
You know, there's no such to services in order for us its its mobile services went through different brands and you know different pricing strategy. So we will not disclose the split between the two.
What out what I would say, though in terms of into the I could say that and that's a.
This is definitely now contributing to margin expansion on the wireless side and EBITDA growth on the wireless I know I told you a few quarters ago that.
Is it is already EBITDA positive and it grows at a very fast space and now we're talking about a you know.
Close to double digits, a you know percent a in terms of a in terms of it the DRAM or the margin. So when you know we're in the winter season, essentially so it's it's going it's growing possibly.
Certainly contributing to margin expansion under the agreement.
Okay, and then you know I know, it's early days for helix.
Oh, it's kind of surprised that the that the cable TV.
Some losses were as high as they were I was just wondering is that sort of in line with your expectations in terms of he likes delivering results there on a for the subscribers.
Yeah. If you think there I would say well first of all.
You know we're currently have.
Oh close to 100000 subs video subs under helix platform and most of them or are the majority of M. is coming from migrating to <unk> from the legacy platform to the new platform.
Which is it's a clear positive for US you know, even though it it doesn't translate it to net adds it's a clear clear positive Oh first of all at once you try. It you don't you don't leave it so in terms of churn it's pretty good on our churn statistics on we're already seeing that you know even though it's all its only six months of commercial service.
We already see that churn statistics are better for the helix customers and the helix, Florida, the legacy platform customer and and it also help on the arc.
So you know migrating customers from one platform to the other or from the old platform to the new one is certainly a positive for us.
Second of all I think that.
No we still have jumped to do with respect to you know the product awareness.
Functionalities on warn us we're working very hard on different communication channels.
Make no the public and the customers other consumers are aware of the product you know what it brings to the table for them. What you know what better functionality is we have with this product and and this is not something that you can accomplish in three months you know our.
No I was I would I wouldn't be trap Brown, I, probably underestimated and all the time period that is required to do that but but still I think its more of a a very you know long term.
Exercise you know to make the public in the publish unaware of the product into functionality.
That being said you know a it's really it's really going better than we expected a you know how to that a total large use of a 190000 as we speak it's better than we expected when we launched a service. So we're very encouraged I encourage where the surface so far and we think that.
Got it is going to improve with the product awareness.
Okay, and if I may have question on the dividends. So yeah, obviously, a nice increase here in the dividend.
Based on my model and that's obviously different than your model, but based on my model looks like the dividend will now represent about 30% I'm free cash flow and I was just wondering.
When do you think or how long do you Dan I'll take you to get to the midrange and saying, 40% or are you targeting a year from now or a couple of years together.
David It's you know that this we've we're following our plan you know we announced in 2018, we wanted to get between 30 and 50% now we're barely reaching the 30%. So Ah you know, we'll continue with our plan, but I mean, it's I think it's too early to to give you some guidance as to as to what the next steps will.
But I think we're delivering and we'll continue I'm on the plan of being you know between that 30, and 50%, but you're right basically based on the numbers were at 29% or something there about.
Okay, and then just lastly, if he could give us an update on TV sports and you know obviously, we saw the seventies see decision about.
How that channel needs to be distributed on on the tier I know about filed and appeal in the federal Court of Appeals just wondered if you can give us an update on that and then also where do you stand when its with respect to getting a proper revenue per sub sea similar to what the other distributors are paying.
What David So as you probably saw a you know we've been a complaining against a against bell.
CRT D. C ran at a decision a which was stating that the bell was favoring his own service and was provide on do disadvantage to get give me a golf and Davy asphalt.
This is certainly you know very strong message.
And we continue to negotiate with ER now.
Unfortunately, it's not the only issue that we have a with them.
And I think that basically yeah. Most of the time if not all we're on the good side of the equation and we look forward to have the you know what we call just mark a fair market value because you know what will providing to our customers well audit.
Others is clearly no good products and then therefore, we should be compensated properly for it.
I think it worth to emphasize the fact that we've been able you know to have agreements with the all other distributors.
And the only one that Renee.
What we consider being the proper prices Bell there are certainly at all in that position in a conflict of interest position because they're pushing for their own channel and then therefore on for generally I think this is certainly not good for the broadcasting landscape in Canada.
This is certainly something also that we made a lot so loud and clear in front of the CR do you see recently during the audience that took place for the the transfer of of or the network to Bell media and we look forward to continue you know to push with what we consider.
Sure.
The the proper position for the TV shareholders, and obviously also for that get back or shareholders, Indiana today.
But can you give us an update on on the federal Court of appeal that balance files is there any news there any resolution anytime soon.
Oh here, we're still waiting for hearing date.
Oh, they haven't even okay has the federal court of appeal, even decided to Aaron.
Well you me I didn't get what do you worry about it as they decided to hear it yes.
Yes, they yeah. Okay. So they have agreed to hear this they haven't throwing it out entirely.
<unk>.
I wanted to ensure that we talk about their rights file here yeah, Yeah, sorry, David you just want to make sure that you know it's important.
You know that that's the depuy decision there which is in front of the court that said the TV a issue is in front of the C or D C.
But I am I right to say double.
It's already sold before the federal court yeah. Okay.
He is the this that's going to decision.
And the the damage bolt on quota that's it compensation, they're asking for.
As you work as you know we have.
Several issues, but also a civil litigation files going all the with Bell.
Okay I, maybe on the other power, but just wanted to be sure that we were talking about the same thing here.
Okay.
All right. Thank you. Thank you David next question. Please.
Next question comes from Tim Casey from a B animal.
Please go ahead Tim.
Thank you could or could you talk a little bit about how a wireless performing I know you don't like giving.
Backs or margins there because it's so hard to allocate cost, but could you give us some color on on how you're you're seeing the progression. There in and then just a question on network capabilities. You know there is some concern out there that a lot of people are gonna have to work from home.
And students are gonna have to a study at home I'm just wondering if you're talking about how you you engineered your network. My understanding is usually it's done with a six to 12 month window in you assume a.
You know a significant any increase in consumption I'm, just wondering if you're doing anything extra or contemplating doing it in extra given what's going on with Covidien team. Thank you.
Or something else. So just to introduce before you know you answered. Your question you know I want to make sure that a everybody knows and this is certainly something that you know a which we consider a I significant concern.
We've been meeting you know with the all of our.
Hi, or management into different operation Foams Allfast waterfalls through my thing I went to the at office staff to make sure that you know we cover all those aspect of what the health issue.
Our are all about are right. Now. This is something also that we address yesterday the board of directors and according to a you know all the efforts that we've been doing I think that you know we're we're up.
And the proper situation to diminish or the issue, but oh, all those questions related to.
Other incidences and a nice don't sit and therefore I think the you know when possible we'll be ready to do ask the this is the specific question that you've been asking.
Hi, Good morning, a 10 in terms of the wireless performance I'm you know like I said Fizzes is clearly contributing to our.
EBITDA growth on the wireless on wireless services in fact, a India growth for the first quarter year over year was about a 30% this year with while this quarter with wireless so it's it's clearly accelerating since the the you know the erosion or dilution impact is now behind us with with is.
In terms of a in terms of wireless capex for the quarter 37 million was spent on wireless.
In total for the year was hundred 12, and you know and our guidance for 2020, I would say that a wireless capex will probably be in the same ballpark.
Hey, Maria so.
It's a that doesn't mean that that's what I would say four for wireless services unless you're having another question. Your specific question related to that but with respect to network capacity or you're right. The mentioned that when we do our budgeting and our investment program. We we usually make sure that we have six to 12 months of a of couple.
City for our network I can tell you that a you know for 2019 and so far in 2018, as well and 2020 as well usage is below what we we plan to expected than budgeted. So solar so first of all going on I'm not in a I'm not worried at all.
With Oh.
The impact of the of the virus on consumption and network capacity.
Thank you.
Thank you.
Yes.
Next question comes from a Maher Yaghi from there's off day. Please go ahead mark.
Hi, Thanks for taking my question.
So I wanted to ask your question related to the cable business.
When I look at your TV subs.
You know last here in Q4, there were down 2.5% here on the here and that has expanded to minus 4% mind. You. This is not specific to cubic or it's a question more about the markets in general.
Are you seeing well from from what we see in your subscribers were seeing annex Plano and acceleration off the decline.
Have we reached some kind of a supports a support level here or you expect the decline in TV subs to continue to expand.
Knowing that in the states this even higher than that level right now.
The second question I had is on the wireless.
Uh huh.
You mentioned that you're says loading was a was strong and I'm wondering if you've reached an equilibrium yet because you mentioned that last quarter.
As long as you have not reached out to quote livery and between isn't videotron you could consider continued to see pressure on Apu.
Are we had that level, where the pressure is gossip side and if so are you thinking that the decline on the pool, which was 2.6% year on year.
Might stabilize next quarter I have a final question off.
Okay.
Well I can talk for 15 minutes on the first one.
No it's how to other put that.
I'd say that Ah you know, obviously, you know helix and or new service or new platform will be will be of of great help.
To mitigate subscriber declines that being said, there's some a similar trends in the market. We all know above that but the good news is with a with helix. A you know I you know I can tell you that in Q4, our share of gross adds in Q4 has grown over last year. So you know, even though we might see some sick.
And our trends impacting us with helix, we are grabbing more share of of of gross adds that we were you know last year.
So I think that with a with a.
A better product awareness functionalities awareness.
That's that's will that will improve.
And a combined with the reduction in churn that you know the helix customers are showing I think that a you know over and over the mid to long term it shouldn't be it should be positive.
In terms of a of GBP you Andy equilibrium no I don't think we've reached equilibrium at yet that being said and it's it's only because you know as we grow our subscriber base with their with Phys and be while you're doing you know two thirds of our Subodh Worby why would ease and they obviously come in a lower ARPU.
Ah, but again you know one I mentioned that again and I will repeat in the repeat in and repeat it and you see that in our financials.
I love the free cash flow profile of the view why would you customers because you know obviously, we don't have to subsidize.
The handset costs, but on top of that we are able to limit a you know our to improve or have churn stable and it's been improving over the you know a few quarters. This this quarter. It stable, but you know I think that it speaks to our strategy and you know you see that in our in our financials I think.
Pretty pretty positive. So I don't think we've reached the equilibrium yet that being said some you know very very positive signs you know fit is the inbound ARPU is up close to 30% you know when we're out of this stabilize stabilization period with respect to our pricing so.
<unk> as improve like $8 over in a year over year, a which is which is obviously pretty positive, but still commanding a lower ARPU done you know the overall base.
If you look at the Videotron mobile Brent specifically once again year over year inbound Abby you is up so I think that you know once when once we will get Disequilibria, you're gonna see ARPU growth.
But I will that that as well I will repeat I don't care about ARPU I'm looking for cash flows.
Okay.
[laughter] I have a one one last question I wanted to ask your related to the Minister Hi, sudden minister talking about [noise].
One thing the Industrys prices.
Declined by 25% and generally years, you mentioned that the you know and it's true that.
He did not stipulates for you guys to do that then he was talking about [noise].
The big three.
But even though qubec prices are below those off Ontario lets say NBC.
Historically, Tibet prices have always or have been lower than we see and Ontario. So.
If prices in most provinces. The Cline why don't you think that Qubec prices will also decline and the same branch.
Well.
You know, it's it's purely speculation obviously I don't know the thing I know is prices are already 35% to 40% lower than the rest of Canada, RBC, Alberta and Ontario.
And I think a you know where the big threes are making money.
Our big money I should say, because I I, suppose there, making money in and get back as well because we do so you know if we do there's there's certainly do but I think that it's really in a and B C, Alberta, and a and Ontario.
Where a reduction is necessary you know being 35% to 40% lower lowered and the rest of God I don't think that Qubec is is the target that being said.
I truly don't know I you know in the past we've led the market in terms of of pricing.
I don't think it's going to change a you know we've got we will continue to lead the markets in terms of pricing. So so it all depends R&D on how the the victories.
On a react with respect to the province of get back and so far and obviously I I really don't know.
Okay. That's fair thank you.
Next question. Please Oh right at the last question. We currently have in the queue comes from Vince Valentini from TD Securities. Please go ahead, Vince good morning, Vince.
Hi, Thanks.
As maybe about you are going to record boxes, you only company razor dividend, 70% never stopped go down 5%, so [laughter] add on that.
But congrats on that hormones by the way I.
Thank you.
The I have a couple of clarifications, if you don't mind show.
The.
Let's start with she away.
Sure you all fronts, while at the sort of one third of your gross ads that are not coming it won't be why would he can you give us any color on what's going on with equipment subsidies and an acquisition costs or are you able to keep those stable or is there any evidence recently they may even be starting to decline based on the actions of some of your competitors just try to do more of the IP.
And lower subsidies, yeah I like this question.
I I will I would say might start of I always start by saying that.
I think.
Then last year.
You know Q4 in Q1, specifically, we somewhat lost control on on C. away.
It was way too high.
And we had to do an adjustment and the way that we were marketing or stuff.
And you weigh related obviously.
[noise] things that we've done during the course of Q2 and we've continued to do so on a year over year basis is well under control and I assume that Q1, you know we're already two months out of Q1 now.
You know Q1's going to be as good as a as it was for you know for Q4. So I really think that's a it's well under control sequentially I'm not seeing a you know I'm not seeing nothing that is overly detrimental you know it's seasonal as you can imagine Q4 is usually on a sequential basis more.
Active with respect to see away a more expensive with respect to see away because of the black Friday, and ER and the Christmas and the holiday period, and whatnot, so, but but on a year over year basis I can tell you, it's well under control and even though where we didn't go into the people immobile I'm you know you look at all.
In our share our gross adds and market shares that are going up I think that's why we put on the table for the Qubec consumers is the right thing doesn't mean that we will not have to change in the future, but so far.
Very very positive with respect to our strategies and tactics.
Thanks.
And with a subset of of ARPU can you give us any color on your exposure to roaming I would assume it's less than the incumbents because you haven't really cracked a business traveler market share. The same extent they have yet to but I mean are you willing to give us any number of how big that would be.
Yeah, you know obviously.
Our buckets are data buckets always been I've always been greater are bigger than than our competitors.
We've been as you know we've been the first to launch a six gig six gig is nothing no. But you know we've been to serve the first in Canada to lunch of six gig you know data buckets or was it six years ago. So.
So our buckets always been greater are bigger than the then the other so hence lower overage revenues, obviously, so and since we've launched our Zen a package and you know which is some say 100 gig per year and an extra of your art you know Karen package you know.
We haven't seen a just a significant negative impact on overage revenues because over driven it was never been a victim.
Sorry, Jeff, but sure if I'm confused a question I wasn't referring to date overage I was referring to roaming when your customers or are in terms of roaming no roaming is nothing for us. It's it's even less than that overage [laughter]. Okay. Just see I thought so just want to make sure and last couple just.
Clarification did on <unk> resale, you were going to resale and emotion and then you are buying it instead is there any reason that same concept wouldn't work in code you goes territories in Quebec. So that you can bundle wireless with fixed line services are you contemplating reselling their network too.
I'm not sure I'm. Following you think you talk about mobile or well. If you you can use the TP, hey rules to resell their internet.
Ill.
Then bundle your wireless service with fixed line products in areas, where you're not actually the cable company not in a car.
Okay.
And anything you gone.
On a either cash taxes is there anything unusual to think about for 2020 and can you give US a reminder of your your foreign exchange exposure on on either hand chat capex purchases and how much of that you might hedge.
ER.
To answer the first question nothing unusual.
Nothing different than 2020, then than the 2019 on cash taxes or.
As far as a foreign exchange is concerned we hedge so U.S., yeah, we buy or we buy handsets and we buy a number of Ah components in U.S dollars and I'm. We're following what we've traditionally done north for many years now, which is oh, we hedge or 50% of our exposure and we'll continue to do so.
Would you build a share what they're the rate is for your average I just wanted to be around the 1.3 level [laughter].
[laughter].
It's it's it's a I wouldn't want to share it but Ah you are probably not far [laughter] whichever shared yeah. It does not have share half year [laughter].
You're in the ballpark.
That's it for me thanks.
Good. Thank Ben Thanks. Thank you thanks, Vince and thank you all a attending this conference call. The we'll talk to you next quarter and expecting that then it will be in a better environment. So all of you. Thank you very much enough nice day.
[noise].