Q3 2021 Quebecor Inc Earnings Call
The conference is now being recorded.
Good morning, ladies and gentlemen, thank you for standing by and welcome to the chemical or inks fine.
Actual results for the 2021 third quarter conference call.
Turn to use Cmos Chief Financial Officer of <unk>, Inc. Please go ahead.
Good morning, everyone, ladies and gentlemen, welcome to this conference call joining me to discuss our financial and operating results for the third quarter of 2021.
Our president and Chief Executive Officer.
Anyone unable to attend the conference call will be able to listen to a recording by telephone or webcast.
Details are available on <unk> website at Triple W Das, Quebec, where dot com.
The recording will be available until the second of February of next year. I also want to inform you that certain statements made on the call today may be 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.
Now I'll turn the floor to kick out.
Yes, good morning, everyone.
And as we announced last quarter. We are moving ahead with our plans towards the expansion of our telecom services across Canada.
By creating a real competitive dynamic and bringing to Canadians to benefit.
The logical innovation superior client experience.
Lower prices.
The first step towards our objective of becoming the fourth independent wireless provider in English, Canada became a reality in July with our <unk>.
Investment of nearly 830 million the acquisition of 294 blocks.
<unk>.
In the 3500 megahertz band across Quebec, Ontario, Manitoba, Alberta, and British Columbia, our investment of $357 million.
419 licenses in Quebec will enhance an already solid spectrum base acquired throughout the last decade, starting in 2008 prior to the launch of our facilities based wireless operations.
These licenses will be used for the deployment of our <unk> platform, which is already in operation in Montreal, and Quebec City.
The remaining investment of $472 million is dedicated to the acquisitions of licenses in the main regions.
The aforementioned provinces.
On this topic I have to say that we were surprised by Telus CT initiatives against the government of Canada.
Try and block the award of these licenses do you do it too.
That being said we were relieved although not surprised this time that the federal court clearly told tell us that it's plain was without merit and denied its entry isn't really motion, stating and I quote.
Tell us arguments are attainable and do not raise serious issue.
This is the paragraph two.
And I still quote.
The decision factor is the public interest and fostering greater competition in the market for mobile phone services and this is the paragraph four.
It is sad.
To realize the lengths to which Telus and Bell will go to delay.
Got it.
And to ultimately squeeze out at all cost any efforts to create healthy competition.
And ultimately lower the prices Canadian pay for mobile services.
We continue to call on governmental and regulatory authority to issue the licenses and more generally and sure that their longstanding competition policy objectives are back by concrete actions, forcing the incumbents to actively.
Cooperate and take the necessary steps will that Canadians are not less paying amongst the highest telecom prices around the industrial line work.
I would also like to comment on our recent court action against Rogers, our longtime ally and partner in building a joint wireless network and connect.
To remain on the legal side of business and keeping in mind that the suit do DT rule as well as a respect to the courts I will not comment any further nor I will answer any question regarding this matter.
Only thing I wish to share is that over the last year.
As described in the claim.
We've always strikes.
Through the network steering committee to find answers and solution.
To the various change request.
Demand.
In other asset from Rogers New management.
But every time, we met Roger's request they came back with further and iron demand.
And since Rogers felt comfortable.
The state publicly.
We fail.
To meet the investment asking to improve our joint network to benefit our customers.
I myself feel comfortable to say that as far from the truth disabled.
As Juno.
Oh I didn't recognize for many years.
As the most respected telecom company in Quebec.
Could this be possible without adding our plant.
At the center of everything we do.
We always acted as a true partner to Rogers and try to avoid the heightened publicity of a public recourse.
Negotiating a suspension of the time limitation period of three years.
According to the law to give ourselves a chance to settle our differences but to no avail.
Given the current events at Rogers, we now understand why our discussions.
Were not a priority and sincerely hope that when the air clears at Rogers, We may have a chance to engage in a constructive dialogue with open minded individuals.
Turning to operational matters.
We launched.
The purpose of French language video subscription platforms dedicated exclusive unscripted lifestyle documentary and entertainment content and just a few weeks, we recorded 17000 subscribers.
And over 2000 200000 views.
We will offer for your original production this year and over 100 original Quebec reductions.
End of 2022.
Along with the success of political which is dedicated to series movies and youth program. This new platform will enhance and complement our content offering.
We are expanding our collaborations with local producers and we will continue to significantly invest in the production of new local content, thereby strengthening our leadership position as the largest catalyst for original French production and connect.
Speaking of politico or their own successful OTT, we launched our program in two weeks ago with a record number of new majors original series and an exceptional 2021 2022 lineup featuring leading figures of Quebec cultures, such as that.
Thank God loss, no pay and so if you didn't have as their assets sorry, as well as affiliate fell out, though and that is a lot.
Finally, bringing all of these investments together, we also unveil.
Our new digital platform that brings all of Quebec Girls, sorry, you can bet for news and entertainment content together in one place.
Available on the web and via mobile App.
It's a unique showcase with a vast quantity of multi source multi format content, where users will have access to millions of items.
Including Tech music video and audio in a single environment live and on demand.
Once again on the forefront of innovation and anticipating market demands and trends.
We will further reinforce one of Quebec, or most important competitive advantage against our national competitors.
Our unmatched ability to produce and deliver unique.
Differentiated differentiating news and entertainment content.
On the lead to be front.
We're pleased to announce that to do with all business team up with Estelle, Yeah, Quebec based technology company to offer to offer a wider range of connected objects solution to accelerate the digital transformation of cities municipalities government organizations and businesses across Quebec Andrew.
And then with solution for waste management water management, and quality smart parking environment management and noise pollution.
Did you do at home also recently landed a major contract for Iot services with the U S. T M, which is the Montreal public Transit authority for.
<unk> strengthening its leadership position in Quebec.
Moreover, in September we do it voluntarily asphalt announced their partnership with <unk>, which is a new team with the E C. H L.
The new quality data Arena is now named <unk> Z you do at home and TV as far as the exclusive OXXO broadcaster of the trial yet.
Our own games.
This partnership demonstrates our continued commitment to Quebec sports and entertainment industry.
Supporting and promoting the next generation of Quebec athletes as well as contributing to the economic development of Quebec regions through investment that benefit local community.
I will now review our operational results starting with our telecom segment.
On the wireless front, we posted 41000 net adds during the quarter.
Despite the continued aggressive competition from a loading and renewal perspective.
Especially towards the end of the quarter, we were able to keep our turns flat year over year and once again captured the largest share of gross adds by far with 37% of the market, our best performance ever and with.
If you do at home and food brands coming in first and second position respectively.
Corning to Elysium marketing survey.
Consolidated wireless Abu for the quarter declined one, 6% or 83 versus 2020.
This decline is explained in large part by the dilutive impact of of D. Y O D model at FID combined with a decline in roaming and data usage revenues.
You do a call recently enhanced its value proposition regarding the equipment installment plan by launching in September the take back credit program option.
Low end customers to further benefit from reduced monthly phone paint.
Payments.
In broadband.
We're pleased to report another strong quarter with a growth in internet subscribers of 22500.
2000 more than during the third quarter last year, and a two 1% or $1 13, Internet ARPA growth.
In the quarter more than 100, and a 100000 helix installations were completed bringing our total analytics subscribers to over $1 million as of September 30th 2021.
Our <unk> TV continues to help lower our TV churn rate and mitigate our TV subscriber decline, which was 13400 in the quarter an improvement of more than 2000 compare to the third quarter last year.
We continue to promote helix self installations, and we are very satisfied with their resolve thus far.
We have already surpassed 100000 self installation since the launch in March 2021.
And are pleased to report a 93% overall customer satisfaction rate.
This program has proven to be very successful and we will continue to improve it to maintain the current satisfaction rig level.
In our media segment.
Advertising revenues continued to increase.
Particularly in our television network, where they came in higher than the same quarter of last year, but also and 22% iron than the same quarter in 2019, which is as you know pre pandemic.
Our consolidated market share reached 38, 2% for the quarter.
<unk>, our leadership position in the Quebec market with such a defense version of Mac singers and the Stanley Cup finals Aki games.
Building on our number one franchise, we continue to increase our investment in content and a strategy that is reflected in our fall programming with a wealth of new shows original production and exclusive content for our digital platforms such as daily outflows.
Which continued to grow and build on its strong popularity.
Our array of content is broader and more diverse than ever and is available on multiple platforms to reach more come back or is it on a daily basis and bring them together for a major television event.
Our film production and audio visual services.
Segment also performed very well with I demand from Mega productions, such as Paramount Picture makeup production Transformers rise of the beat and also from a major online streaming player now.
<unk> services are increasingly being recognized and used by international clients, placing us in the inviable position of being able to take advantage of the current market growth and plan for expansion our facilities with the upcoming constructions.
As of May of four.
Our virtual stage services continued to draw the attention of producers with greater numbers using the technology to facilitate shooting certain scenes or creating advertising.
I will now let you review our financial results.
Yeah, Yeah, count backwards revenues were up 3% in the quarter, a $1.15 billion and EBITDA was up by more than 1% at $520 million third quarter revenue growth from our telecom segment was flat as compared to last year.
As the growth from Internet access and mobile telephony up 6% and 8% respectively.
Was counterbalanced by a reduction in mobile equipment with more B Y O D than in Q3 last year and also the stabilization of the growth of <unk> and helix equipment sales, which drove most of the topline increase in prior quarters.
Our telecom segment EBITDA posted a decline of 1% compared to last year as a result of a $19 million unfavorable impact of the impact of $19 million, one time item in the third quarter of last year.
Without the impact of the 2021 time item, our telecom EBITDA would have grown by two 6% in the quarter.
Our overall EBITDA margin remained strong at 51% for the third quarter. So one of the highest end to end the Canadian telecom market.
Our media segment recorded revenues of $191 million, a 21% increase.
And an EBITDA of $37 million or 47% increase compared to the same period last year.
In our media segment TVA group continues to benefit from the improvement of activities from almost all of its sectors as evidenced by the 26% and 52% respective increases in revenues and EBITDA during the third quarter.
Tobacco to reported net income attributable to shareholders of <unk>.
$173 million in the quarter or <unk> 71 cents per share a $32 million increase compared to the same period last year.
In addition to the EBITDA improvement. This increase is also explained by the gain on valuation and translation of financial instruments related to our convertible debentures.
As well as to the restructuring initiatives that were put in place during the quarter.
Adjusted income from continuing operations, excluding unusual items and gains or losses on valuation of financial instruments came in at $176 million or <unk> 73 per share compared to an adjusted income of 173 million or <unk> 69 per share in the same quarter last year.
For the first nine months of the year, Quebec, whereas revenues were up 6% to $3 $37 billion and.
And EBITDA was up 3% to $1 four $7 billion revenues from our Telecom segment grew 4% to $2 78 billion and EBITDA increased 2% to $1 four 1 billion for the same period.
Telecom Capex spending excluding spectrum was down $18 million for the quarter as compared to the previous to the previous year, mainly due to the timing of some of our investment.
On a year to date basis Capex spending is comparable to last year with continued deployment of the L E.
The advanced oil and or five G rollout as planned.
Our cash flow from operations for the third quarter of 2021 increased by $20 million or 6%.
$366 million once again, demonstrating the resilience and strength of our business model as well as our continued operational and financial discipline.
Cash flow from operations from our telecom segment grew $11 million or 4% to $337 million.
TVA group's cash flow from operations grew 44% to $29 million in the quarter.
As of the end of the quarter, our net debt to EBITDA ratio was 280.
Up from $2 76.
Reported at the end of the third quarter of last year still one of the lowest in the telecom industry competitors and peers in Canada.
Despite the redemption of Videotron, 5% senior notes in Quebec, where media is six and five 8% senior notes in July we had $2 $3 billion in available liquidity at the end of the third quarter with growing free cash flows and strong credit profile, our liquidities are giving us the flexibility to continue and invest in strategic.
Important growth projects, such as mobile telephony.
<unk> and content and continuing to invest in studios.
During the first nine months of the year, we purchased and canceled $7 1 million class B shares for a total investment of $226 million.
Since we initiated our N CIB program 10 years ago, approximately $47 7 million class B shares have been purchased and canceled.
We thank you for your attention and would now like to open the lines for your questions.
Alright, So just as a reminder to ask a question you can press star one at any time.
And our first question comes from a.
<unk> from <unk> Bang.
Please go ahead.
Gentlemen.
It was all demand. Thanks for taking my question first question on the media front a good good results.
Just looking to see how.
How recurrence.
Are the good results in terms of film production I know this business can and can sometimes be lumpy, but I also think you've made significant investments in that business.
Can we expect such.
Such good results going forward as well.
Well, thank you Joe.
That's you know what looking forward.
Is not always an easy exercise.
As we and we will certainly out.
The opportunity to talk a little bit more but I expect no questions regarding the telecom environment.
And then I wouldn't say that are you know in the broadcasting industry is also quite competitive.
Obviously, you know we're getting out of a situation where you know pandemic was certainly not the best environment.
As you know the and advertising revenues.
We're certainly not in the best conditions, given that most of the retail business with Lowes and.
Significant.
Businesses.
We're not performing.
But we need to say Ah that are in front of US you know we have our two main competitors.
Bell.
Which you know with a specialty channels lineup and generally are much more in a better position than the previous owner and in fact in all of these these are the kinds of her presentation. We made in front of this year D. C. Do you have a national platform and English.
And in France, which we do not.
Yeah.
That's also provides.
The capacity for them to move forward there are a good thing.
And it's been also.
Use by our competitors in Canada.
Is one of that which is the second one I was referring to earlier.
We have many platform. So if we are investing in this as we do as example, and I mentioned it in my mind.
And patient and political AD or in Nevada, which is our new OTT documentary platform.
This also gave us the opportunity to rebroadcast this gone back on the other platforms. So we are multiplying the amount of vehicles, which we are able to use to generate advertising and keep our audiences as much as possible. So this is something.
We've been doing for many years already and it's been copied by that do kind of do with are there are two point, the VX, which you know for us it's quite it.
It's a big question, Mark because I didn't know that the national broadcaster will compete against private networks.
On an OTT basis, you know to me. This is distribution, where there should be a broadcaster in fact, we made our presentation. During the due Canada renewable audiences, we expected decisions to come forward and figuring out what does the ITC thing about this.
And so we look forward to continue to expect a competitive environment.
We certainly have a leadership position and we will continue to invest to make sure that we remain number one on this segment.
I think probably the long answer but yes.
No that's fine.
And then secondly on the back to school.
Do you feel that.
You had the full benefit out of this or this was still not a normal year just trying to assess your if your net adds could be it could be better or similar next year are just related to back to school.
Okay.
This was a fairly a fairly active and fairly competitive back to school.
You know.
We're quite pleased I mean, you know our 41 and in wireless I mean, you know historically this is a it's a good quarter in terms of loading for us, but it's one of them you know in terms of.
You know we're back to you that it is slightly a bit more challenging you know with a lot of students back and.
Taking in a lower price points.
And and we you know we had that we had significantly more a bring your own device B Y O D. This this quarter, 74% compared to 66% last year same quarter. So that also contributed to that so I think.
All in all in terms of activity.
I qualify it as as is very competitive so pressure on the AR on the you know on the average invoice.
But worth we're fairly pleased with our you know with our loading them, we did very well, we did very well against competition.
In terms of gross adds in our market share. So it was a it was very busy and very competitive but we feel that we you know we came out of it, especially with fizz, which accounts for most of our growth I'm on the right side of this equation.
They are cyclical.
Hey, Joe.
Next question comes from Jeff fan from.
With Scotiabank. Please go ahead.
Thank you good morning, everybody.
There's a question for our peer call you've obviously been very vocal about the national expansion.
But I think the market.
Sitting back looking at the various obstacles that you still have.
You mentioned the lots of the game.
Rogers.
Go back.
Yes, Theres no injunction, but you still have a court case next year.
I think E M B a no cost.
So.
I mean, how can investors gain some comfort that youre, making a good investment decision here can you just kind of shed some light on.
No.
The thing that you're looking out to ensure that you are making the right investment decision. Thanks.
Good as you know Jeff.
<unk> provide a what I would call you know favorable conditions. In fact, you know probably we can see the most favorable condition ever.
Out of the decision. This summer you know, which we call it <unk> 2021 the slasher 130.
And you know it is now.
Related and are the incumbents would need to open their network to new competitors as you know we started our wireless.
The wireless business in 2006, and with Rogers network as an engineer who had participated in 2008, while we make representations in 2008 to make sure that if government was looking to have competition. The best way to do so will be you know to sit well to provide certain conditions one of.
Which are probably the most important would be to set aside a spectrum during the auction also amendatory roaming and few other conditions.
The late that Jim Prentice understood. This situation and then therefore decided as the minister to open to auction with those conditions. We participated we bought the entire 40 meters 40, Meg areas in Quebec, and we started to build our own network to Oh.
All those years of building our network, providing one of the best services, Yeah, we've been able to achieve a significant portion of the market share Fortunately.
You know that was able to provide.
A growing.
Opportunity in terms of revenues and EBITDA that if we were not to have this segment of business.
I don't know you know, obviously, we cannot reduce the timeframe, but 10 years later I think that we should conclude that this this decision which was at the beginning probably question was then therefore delivering some.
Some significant amount of growth and in EBITDA.
What is the plan and the rest of Canada with the MBA, though.
Reagan needed environment statutory to be made with our acquisition of spectrum. We have all the assets to be able to provide a good service in terms of investment as you know we already have invoicing system, we already have call centers we are.
Already have our digital platform, we have all the assets necessary you know to provide a decent commercial proposals.
And you know you don't need to go very far and you guys, which are following you know the telecom industry are those very well all competitive marketplaces in Quebec, when we compare with the rest of Canada, sorry about this but you know this.
This is <unk>.
So next I would like to give you. An example, and you can go on on my My Twitter account for a more oh.
Memorial illustrations, but last week.
And many newspapers.
So if you're going to see on October 28, So last Thursday last Thursday, youll see that in the bank and the Vancouver Sun.
The Edmonton Journal.
In the Calgary Herald.
And the national polls.
In the Ottawa citizen.
That you have.
And out of Bell, which is proposing.
20 <unk>.
Okay.
For 80 Bucks.
This is the same ad.
And you go into Montreal Gazette.
With the same math for the same proposal.
20 gig.
You're finding it at $65.
This is the most recent example.
But it's been like this for many many times.
So we look forward to be able to.
Piggy back on a very.
Lucrative market and when I'm looking about.
The result of Rogers and the rest of the quarterly results of Bell with their significant amount of new.
<unk>.
At the prices that we're seeing.
I guess their room for us to grow there at a decent investment price.
And as you know we have seven years to.
The Bill our network.
Seven years.
And a technology called environment, we're seeing you know.
New perspective.
Which is bringing interesting opportunity to reduce their costs.
Of.
Building a network.
All of those items for me and for US is providing favorable conditions to move forward.
And expect growth.
Elsewhere, there there where are we in Quebec, which is.
I would say are quite mature market for us.
So just a quick follow up it sounds like you're talking about a bit.
Capital light expansion using M. B N O for so are you, saying you don't need to pursue read them in order to to address your national expansion.
Which entity freedom.
Freedom double adult English.
Well you know.
Obviously, if this is a very important matter.
And maybe you have more insight than we do but we get problems to understand what's going on.
With Rogers and Shaw and we're figuring out what will be the outcome of everything.
But you know we're not going to open our our play here and certainly again you know we'd say that we consider that we have a they're also all the proper tools and means you know to be the best acquirer for.
For our freedom. So what is interesting is that we have many alternatives are and this is what we should conclude for the moment.
Fair enough. Thank you.
Yeah.
Thanks, Jeff.
Alright, our next question comes from Tim Casey from BMO.
Please go ahead.
Thanks, Good morning, two for me.
Just following up on Jeff's question sure Charles should we assume then that you'll be launching fizz.
Imminently no matter, how the freedom any remedies related to freedom play out.
And no matter, how MBA no discussions proceed and.
Is that what you're signaling to the market here and just.
An accounting question for huge regarding working capital its been a huge.
So far this year.
And I know that's related to handset acquisition in AIP and whatnot, but just wondering if you expect that to swing in Q4 or more likely in 2022. Thank you.
Yeah Bob.
Thanks, Tim we Unfortunately don't control you know the different actions they are taking by the incumbents to stop and to refrain or a capacity to offer a a proposal to Canadians in the different areas, where we are acquired spectrum.
We've been seeing once again that they're completely on allergic to competition you know when you start suing the government of Canada in a regulated environment.
Where you are spectrum comes from the Ministry I mean, it shows our allergic you can be has done a great move well you know you have your your own take on this I have my own.
Will they appeal.
Court decision you know of last week by the Federal Court within 10 days ago will they continued to delay in court.
Oh the.
Delivery of the licenses by the Minister.
All of this we don't know we also are in front of the CRT D C with the more technical discussions regarding how should we connect the different networks Oh should also have access to yeah again, those are technicals, but no debt.
The fall back are they the roaming obviously also where all the tariff and the tariff vacation and will be a matter of discussion and eventually arbitration in front of the CRT D. C. So in a nutshell, we expect not being able to do it next week and probably.
Not next month, but as soon as the city and the other governmental authorities will move and make sure that you know a competent competitions will be brought for Canadians.
We're ready to move.
And on your Tim on your working capital question.
I certainly expect the the you know the pressure on working capital to continues stabilized that continue for all the reasons you brought up there that they are the right ones, obviously, the IP program.
And us building inventory and on many components are because of lag times are increasing so I would certainly I think it's going to stabilize a little bit it is stabilizing but I certainly expect it to continue on to Ah Ah at the beginning of 2022 for Sean.
Thank you.
Thanks, Tim.
Our next question comes yes, sorry.
Good morning, Vince.
Next question comes from Vince Valentini TD Securities. Please go ahead.
Okay. Thank you.
Good morning to you as all of you are correct.
First question the $18 8 million can you clarify that.
All in the wireless segment or where it's showing up in videotron wireline as well.
No its all in wireless it's been since a reversal of AWS licenses that we had accrued for for a couple of years and our regulatory.
Department finally told us that that was a mistake and we didn't need to accrue for that because we wouldn't have to pay for these licenses. So it was a 100% reverse last year in the <unk> and the wireless business.
So if we take that headwind or one time item into consideration.
The typical question you get on wireless EBITDA growth I assume itch, it's negative year over year, given that $18 8 million.
Actually no EBITDA growth is it is small but it still is positive for the quarter.
Even accounting for that.
So the.
Videotron, excluding wireless is down a few percent year over year then.
Right.
I mean, it's pretty flat.
I mean, EBITDA as you know for us it depends how you allocate certain certain certain network cost, but I mean, you know we even accounting for that I think you know, we're looking at flat and and.
You know slightly positive on the on the wireless side flat on the wireline and slightly positive on the wireless.
Okay.
Okay.
Thank you put on your history Capex.
If you go back and adjust last year by $18 8 million.
Would mean that Q3 'twenty.
Communications segment, EBITDA was down about <unk>, 6% versus Q3 dollars 19.
That seems to be out of line with the trend we saw throughout other quarters. In 2020 was there something unusual way back in yeah.
Of 19 that caused EBITDA to drop in Q3 last year.
Yeah. We had another this is the second year in a row of a of a one timer or events.
We also had a reversal of about 20 actually yes.
Just slightly over $20 million in the third quarter.
Of of 2019 as well.
So last year was pretty you know I think from an operational standpoint. The you know the the results of Q3 of last year were pretty much in line. It's just we honestly got it but you know what.
A bump in the third quarter of 2019 gotcha Okay.
Helps explain and thanks to you and my last question sorry to go back to the same topic on the wireless expansion, but I wanted to ask just a slightly different way just to be.
It was clear on this I think I asked similar question on the last call.
If there is another.
A freedom and therefore.
Another fourth carrier that exists in most of the rest of Canada.
Would you still intend to go forward as an <unk> and then build out a network over seven <unk>.
Here's an effectively be the fifth player entering the market or is that is your plans contingent on seeing what happens with the fourth carrier before you decided on being number five.
We appreciate your assumptions.
But you know I.
I think that's just not gonna be a.
Possible to answer.
Quite you know Oh.
We'll find out you know in due time about what's kind of happened.
And that would be.
I would say Unappropriate yeah. The answer is things that we don't know what's going on with whats going to happen.
Yeah.
Can you tell me of the Rogers transaction is 100% done.
So I guess that some people would think who bought the lead thing that.
It could be.
A different outcome I dunno so.
For me speculating on what's going to happen is not useful.
Okay.
Fair Fair Carl I agree with that I guess implied in your answer though is you are going to survey what does happen as we do get more facts over the next <unk>.
Several months as opposed to.
Plow forward no matter what.
You're almost acknowledging your answer that.
Could change and we don't know how the world is going to unfold and you need to assess as we go along is that not a fair.
Interpretation.
Absolutely I guess that you're right.
That's all I'm trying to get at.
Dynamic situation and we're all learning as we go so I appreciate that color and I'll pass the line.
Thanks, Chris.
Alright, okay.
Next question comes from David Smith.
<unk> from <unk> Securities. Please go ahead.
Thank you a couple of questions. So.
Just following along the line of questioning regarding wireless expansion across Canada.
And I'm assuming.
I shouldn't assume what would you wait until you have a bundled product before you decided to go across Canada with wireless.
And if so I'm just wondering how that might impact your rollout because I know all of them.
And then that reseller and he was delayed for two years.
By the end come in to be able to resell their products I'm just wondering if they could do the same with you I'm just really am slow down your your in your rollout.
Yeah.
Oh, Yeah, good morning, David.
Yeah.
I guess that that would continue as Oh my predecessors had been.
Doing before.
I wouldn't I'm not I don't think that's appropriate to give us our strategy, our marketing strategy and the different products that we will launch, but you certainly you know what.
Identify.
The different things that are available or possible. So I guess that what we should say is that in our hands are off the ability of moving forward and the capacity you need to grow our revenues and basically also justified even more.
Never our requirement to move forward.
Outside of our historical Quebec base too.
To continue to grow the company.
Okay.
Okay.
And then just another question just on the mobile App. So in the quarter I'm like if you look at Q2, it was pretty much flat. It declined a little bit again Q3 is that we sort of had hit the inflection point between.
The very type of profile between Tis and videotron and so I was just wondering did that reverse a little bit or is there. Some other factor that caused some more about that.
And about 1% in the corner.
David the maintenance that is the main issue on an App. If you are you know are more b y O D. It's more promotional activity. So pressure, obviously on pricing more increased percentage of growth from from from Fizz, So increased dilution a dilutive effect.
And and and also you know as I said earlier, they're generally speaking you'll remember I mean, the back to school is not it's not as they typically more challenging at few quarter for us.
You know last year, we lost you know three or four 3% on that for you and also youll notice that our our our equipment sales are you know are down. This you know this quarter. So that's also part of the appeal as you know so our view is a little bit less impacted by that so I think generally speaking these.
Claim that I don't think it's a reversal.
I think we're still moving Oh, we're still moving towards the same are the same the stabilization that are there that we've been talking about for some quarters.
And are certainly improving from the minus four and minus three that are that we had been living for the past few quarters before last quarter. So.
That's.
That's sort of what I would I would tell you on a few for the corner.
Okay, and then maybe maybe just a question on Capex.
Can you give us an update on what you're expecting this year and if possible can you tell us what you expect for next year, obviously, excluding the wireless spectrum purchase.
Stability is the name of the game and Capex are.
David for Us.
You know our Oh, we're going to come in.
<unk>, where we are.
Where are we said we would for this year and are expecting also a very stable capex environment for 2022.
Okay Alright.
Alright, thank you.
Thanks, David.
Alright next question comes from Matthew Griffiths from Bank of America.
Please go ahead.
Alright, Thanks for taking the question I'm, sorry to ask another one on this our national expansion.
Issue, but.
Correct me, if I'm wrong from what I heard you say are you going to try to engage in once the terms and conditions are set are you going to try to engage in negotiations with one of the national providers.
Before you go about trying to maybe acquire spectrum from whatever source that might be.
And launched the network or are we to assume that you may invest capital in spectrum and other items and then down the road.
Start to enter negotiations to see what the actual cost of the operating the facilities based in the you know might be.
Matthew.
Most of the spectrum had been acquired already I guess that right now it's in a in a pause.
Ah Phase, where again you know what to tell this had been sued the government.
Forbidding them to issue their licenses, we will find out the outcome of that we expect the first decision.
Unfavorable to tell us that you know, we'll be able to move forward, but certainly this is a condition to a to b and N B N O.
And we look forward you need to have the conditions, we should say that Oh I already.
Send letters to our the different Ceos of the incumbents are telling them that you know we would like to entertain discussions and negotiations regarding their access to the network and basically the answers that we receive is that we look forward to continued their regulatory.
Process, which is basically saying on the between the lines as they are.
They do.
And you know he bus.
The the lineup and the delays are.
So.
We look forward to have the proper decisions made by the regulatory authorities, namely our CRT D. C. A R.
This is the <unk> will be able to move quickly as again, you know I mentioned earlier, we don't control, but we will certainly you know due to a proper representation in.
In front of the CIBC and also I guess that in front of.
The new government, which is not completely new in fact, you know what are the industry Minister is a steel shop buying and he is aware and he is the one that was occupying dysfunction before and I guess that you know everyone is looking at auto we're going to have more competition. So we're also.
Enjoying a.
Political a favorable political environment.
Okay.
A follow up so is it Quebec worse position that.
The 35.
The three five gigahertz spectrum that you have is sufficient to run a competitive network and maybe just a follow up too on the self install rates if I understood correctly about 10%.
Of helix has been self install and I just wanted to ask if that's meeting your expectations as you benchmark around the the industry do you think that there's room for improvement and is this this is like a source of.
Potential margin improvement as the self install and self help kind of things can be expanded or how is that progressing generally as a bucket of potential kind of margin enhancement at AR.
Videotron.
Okay.
Yeah, I'll start with the second part on the self install a math.
We're actually higher.
Higher than 10% of our growing growing higher than 10% on the helix front.
And that is definitely I mean, you know either the two main are the two main drivers on margin at this point that are you know on which we're pushing as hard as we can are the self install and the digitalization of the the whole client contact.
And so we're continuing on that I mean, we're not happy to answer your question, we're not happy with being.
Being in the in the 10% to 15%.
Range, we are happy that is growing quite fast.
But you know we need to do a you know we still need to do quite a bit of work on that but it will be definitely one of the you know one of the big drivers one of the big levers are.
Of margin improvement.
Going forward as well as the you know the what.
What I said.
The you know the digitalization and also the simplification of our of our.
Technological.
Set of platforms and systems.
Which are being which are being modernized and ultimately leading to a a much simpler and much cheaper maintenance and and support that type of agreements going forward. So we're working.
Working hard on all these fronts for margin improvement.
On spectrum are Matthew.
The thing that we have enough spectrum to start our business. Obviously, you know if we were to add more it will be up here, but you know we think that we have enough for it to start with as you know I mean, the the auction was quite competitive.
Yeah, we saw incumbents are complaining that they paid too much further with respect to him and then but I guess that.
Is there only responsibility.
I was doing this there.
There will be another auction taking place in the months to come so that will give us also.
Another of virginity.
I think that you know what we should say is that we need to balance everything and you know again regarding the competitiveness of the auction I think that we were at the right place paying the right amount.
For the right five regarding our business plan at the beginning and where we're coming from and where we would like to go.
Alright, great. Thank you very much.
Okay.
Alright, and the last question. We currently have in the queue comes from drew Mcreynolds from RBC capital markets. Please go ahead.
Drew please go ahead your phone maybe on mute.
Sorry, Yes, I appreciate you squeezing me in here just one follow up.
For.
So you said thank you for the stability comment on Capex and in 2022 I think.
That's appreciated.
Among the investors in Quebec or.
I just wanted to drill down into what that is.
Implies in terms of the five G.
Kind of deployment or road map for 2022, obviously, there's a ton of moving parts to wireless into network sharing arrangements and all of that but if you could just give us a little sense there that'd be great. Thank you.
Yeah, I mean stability on all fronts I mean, we started drew we started on the you know the four four and a half G or LTE advanced call. It whatever you want I mean, we've been you know we've been upgrading that and it has started a long you know quite quite some months ago and we'll continue.
And five D. We've always said you know.
Course, we will be there, but it's going to be and in our case in incremental from a capex standpoint, that's an incremental program.
Which does not destabilize.
Not talking amounts that are you know that are these stabilizing any of the wireline.
Programs in place and the you know Wendy.
Other big Guy you know.
Big ticket items that we have in our Capex program.
We have re prioritized.
How many projects on which we had been working and focusing on on the revenue.
Generating in growth generating programs, which allows us to you know.
<unk> used some of the puts and takes to make sure that we are on the whole keep our capex program pretty stable.
So I think focus on an LTE advance continuing to invest in <unk>, but also on the modernization of our systems that I talked about.
So I think we're focusing on the right on the right programs and that there was opportunity for us to to you know to clean up a few things and to be a little more disciplined in our investments and I think this is what is showing now.
Thank you.
So that was the last question. Thank you all and looking forward to talk with you in the next quarter.
Oh.
Ladies and gentlemen, this concludes the cubic Inc. 's financial results for the 2021 third quarter conference call. Thank you for your participation and have a nice day.
Okay.
Okay.