Q2 2022 Quebecor Inc Earnings Call
The conference is now being recorded.
[noise] good day, everyone and thank you for standing by.
Welcome to the cubic Court, Inc. 's financial results for the Q2, 2022 conference call.
I'd like to introduce <unk>, Chief Financial Officer of cubic Inc. Please go ahead.
Ladies and gentlemen, welcome to this conference call.
I am smell and CFO and joining me to discuss our financial and operating results for the second quarter as.
Our president and Chief Executive Officer.
And you wanted unable to attend the conference call will be able to listen to a recording by telephone or webcast.
An accident detail are available on <unk> website at Triple W. Quebec, our dotcom and the reporting will be available until November the 11th of this year.
I also want to inform you as usual 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 cooperation with regulatory authorities.
Let me now turn the floor is yours.
Yes.
S T. A again good morning, everyone.
Before going into details of our operational and financial performance.
I would like to state or a complete commitment.
Dissipate actively and I said ministers shop, I N C or D C Commissioner Scott.
Exercise and efforts to provide a reliable response plan should Canadian face another unfortunate telecommunication outage like the one in Canada had to deal with recently.
More than ever as we clearly reminded.
Telecommunication represent a pillar are the Canadian economy, and one of the most important services.
Our daily lives.
We are calling on our competitors, who have historically benefited from a monopolistic situation to also participate in this worthy blocked it.
Work with us as opposed to trying to maintain its dominance through unnecessary compensation at the detriment of.
Canadian.
On the strategic front I would like to reiterate our commitment and motivation to extend our telecom services across Canada.
As we have stated before we believe that the comparatively I pricing environment as well as the tepid quasi nonexistent competitive and promotional intensity.
Created an opportunity in Ontario, and the west of the country.
And it's time for an agile competent well funded operator with a proven track record to disrupt it cozy country club and start bringing down prices.
In wireless and wireline for all Canadians, who I'm sure are getting increasingly frustrated with it.
Fannie among the audience telecom pricing in the industrial world, especially as an.
Inflation concerns entrants interest rate hikes, and general economic prospects are getting more worrisome.
That's clear evidence of our strong commitment to grow outside of her our historical Quebec market.
As it matures and adding already become the most competitive region and Canada.
Decided to accelerate our expansion by acquiring deep media, a DPI offering Internet services of course and also both regular regulated and unregulated video services through regular TV, we will soon bring competitive offerings in areas, where the big three incumbents Gary.
Pricing presents the biggest upside for us.
The MBA no process would be another way to foster competition, you will remember that more than a year ago. The C or D E. Shaw Delek on regulatory policy 2021 slash 130 elected to open the incumbents wireless network for competition.
A N V I know process.
Along with other telecom operators, we are still waiting for a facility based and D&O framework defining pricing as well as other terms and conditions to be able to decide whether to launch such a service and create new competition.
So that benefit of Canadian.
As we announced in June .
We reached an agreement with Rogers to acquire freedom mobile.
Including several sides agreement that will position us favorably and gave us the wherewithal to offer attractive bundles of wireline and wireless services at much lower prices, while continuing to invest to improve freedom network to a competitive level, including five G.
<unk> capability.
As you know the competition Bureau oppose the larger Shaw Rogers Grant Jackson on the basis that even the sales about freedom to get that call would not provide a remedy and the impact they get it did lead the level of competition and telecom in Canada.
I should tell you we don't share is dispersed perspective.
Get that car is uniquely positioned.
It becomes a successful and long term for player that Canada Mi.
Our unassailable track record.
Marketing agility market share growth and price disruption, while continuing to grow cash flows combined with freedom network market position and further adding the ability to walk the two offers multi service bundle at lower prices.
Physician get back all much more favorably than freedom or any of their predecessors where ever.
Just look at what happened in other markets in the U S.
Europe or elsewhere.
Hi, prevail and have successfully brought down prices for consumers.
It is income principal income transferable to us that the competition Bureau believes that the level of competition in telecom in Canada will be eye or if they're Shah Rogers transaction East is rejected and we will go back to freedom alone.
He will then be a much weaker competitor, having been having been much less breslin and aggressive in the market for the last 18 months as the CEO of belt States. During his last conference call and now adding invested in cruise show five G 3500 megahertz spectrum.
With the addition of Quebec or operational track record spectrum portfolio and financial strength.
We respectfully thing that the competition Bureau, and the C or D C should realize that the longer they wait to ask either either by improving sales at freedom or by finally, establishing a competitive N P&L framework the longer the anchorage to parent oligopoly that is actively limiting compas.
Titian outside Quebec.
It is high time to give a chance to operators.
Capable and willing to jump in and break the strong all of the big three.
In the meantime have been increasing their revenues and EBITDA quarter after quarter. It at the expense of Canadians, who are left with very little joy and very expensive telecom services.
We must act and we must act now.
Let's get the show on the road that far out.
Backing this cosy telecom country club and start bringing down prices for Canadian.
I will now review our operational results.
Starting with our telecom segment.
As the war in Ukraine continues.
Sadly he built.
Oh I've been actively supporting their Ukrainian community by offering a six month. All includes the 20 gigabyte per month mobile plan.
No charge, which has helped more than 4600 community members to date.
We also continue to suspend charges for all calls.
They do Ukraine from Canada to our mobile residential and business lines.
Our <unk> deployment in the province of Quebec is well on track with an increasing number of our operational sites deployed and coverage already in places for a larger urban areas.
In addition, our project up as you know ISP that deliver I speed Internet to 37000 outsold in several municipalities across the province.
On a year over year basis, we added 131000, new ball by a line, bringing our total lines just shy of 1.7 million as of June 30th.
Once again, we captured the largest combined share of gross adds and go back with 32% for our two brands you do it at home and food According to Alicia certainty.
Wireless EBITDA increased by 12% in the quarter compared to Q2 2021.
Consolidated wireless, arguing for the quarter. It grew by 53 cents or one 4% over the same quarter last year due to higher planned mix, especially for FID, lower discounts and higher roaming and data usage revenues.
Setting the diminishing diluted effect of it.
In wireline.
We're continuing our efforts, which we mentioned last quarter the maximize the RP.
Better positioning our brands and optimizing the pricing the pricing sorry of our ethical and helix platform.
As a result, it makes activation slowed to 33600 for the quarter still keeping our total video subscribers at 1.4 million as of June 30th, but our PBR two increase from 46 point 52 cents to 47.
74 cents sequentially compared to the first quarter all in all we were able to reduce video cord cutting for a second consecutive quarter by nearly 20% compared to the same period last year.
We also managed to reduce cord cutting in our high margin wireline telephony service.
Almost 30% compared to Q2 last year.
Internet subscriber growth was flat during the quarter and 36000 year over year, resulting from continued intense competition, especially at the lower end of the market and from a return to a more quote unquote normal moving season and cut back after two Penn.
They make years, which has historically translated into lower net adds in the second quarter.
Although by a pick up in Q3, which our favorable net adds resolved in July are proving the case again this year.
<unk> Internet <unk> decreased by 48 cents or pointing 0.9% over the last year essentially due to the dilutive effect of fees and lower planned mixed we recorded a significant sequential increase by $1 eight from Q1.
OTT video subscribers decreased by 16000 this quarter, our usual seasonal variance in Q2.
The interest for a new and original content remains strong.
In Australia by 11% subscriber growth or Friday, or a new platform dedicated to exclude the unscripted lifestyle documentary and entertainment content.
Now turning to our financial results.
Our telecom segment generated $369 million in cash flow from operation in the second quarter, an increase of 12% over the same quarter last year with EBITDA growing one to one 2% year over year and EBITDA margins, reaching 50.
Three 4% compared to 51, 9% last year and still the highest in the industry.
I would like.
To reiterate our increasing focus on free cash flow and not only on EBITDA, which we consider a secondary measure.
And I emphasize it.
On cash flow is not at all to the detriment of key investments in our networks to ensure their performance and reliability and quality of our services. In fact, we continue to invest as much.
More to deploy our <unk> network numerous network expansion as well as redundancy and backup assets to minimize the risk of any potential outage.
Market analysts and other stakeholders continue to look at EBITDA, but the most important measure is surely the capacity to generate that sleep their free cash flow necessary to pay down debt pay dividends and buy back shares.
Revenue decreased slightly by one 7% in the quarter as compared to last year.
Mostly due to lower Alex equipment sale.
All thing from a slower earnings growth as we optimize our two brands pricing to improve margins.
On the Opex side, we're starting to see material reduction from the various initiatives implemented over the last year translating into are increasing and industry, leading EBITDA margin.
Telecom Capex spending excluding spectrum was down 33 million for the quarter as compared to Q2 last year as we continue to focus on our strategic priority.
As we operate more efficiently.
And then linked to lower our cost structure, while maintaining or increasing our investment level as I said earlier on tea initiative, such as LTE advance and five G. Rollouts profitable network extension and much needed it platform migration to be able to get decommissioned leg.
<unk> system and optimize our cost structure.
Turning to media.
Our second quarter results were significantly affected by the soft advertising.
All our platform in the lower profitability of the T V a network.
As a result of our ongoing strategy of enhancing our investment in content to maintain our market leading position.
During the quarter viewers, we're able to enjoy a wide array of new content, including major by already shows such as stock at any.
Hit, which drew an average audience of over $1 5 million as well as new exclusive reality shows and program.
Our strong programming enables superior network to grow its market share by plane 757 points.
During the quarter and to stand out with the advertisers and limit the impact on their network advertising revenues, which declined by one 7%.
Our digital platform increase their revenue by 19, 9% during the quarter due in part to the growing popularity of daily up loose.
We intend to continue to invest in our programming to maintain our leading position in broadcasting.
Speaking of media I have to say al dismayed we are by the recent decision by the U R. D. C to allow C. D C and I took it at more flexibility when it renewed is broadcasting license and most importantly to ignore the calls to remove advertising from its television services.
It was done with his radio services years ago.
G B C LNG, Canada, it's been even more competitive lately bolt on the air.
Carrying infomercial in addition to its existing advertising vehicles and on the web as it didn't loved it presence online.
The status quo.
D. C is maintaining allows them to capture even more of the advertising dollar, which as you know are the sole source of revenues for the over the air television station that brings Quebec penalty together in front of their TV screen.
Got it can't all mainly due the weakening and continuous decline of private television in Canada in the face of foreign competition.
We call on the Minister of Canadian Air Eric H to intervene.
To ensure that Canadians continue to have access to multiple sources of news and entertainment and to protect our society flourish lithium and diversity.
Finally.
Turning to our sports and entertainment operations.
Many activities resumed this quarter like the Roger waters concert a couple of weeks ago. At this time to do it all and prospect of continuing to improve with a full calendar lineup and sports and music for the fall and winter.
I will now let the U S.
With you our telecom and consolidated financial results.
<unk>.
For the second quarter, because that quarter's revenues reached $1 1 billion.
Down 1% from last year.
It is from our telecom segment was down 2% to $913 million mainly.
Mainly due as we said to the decrease in the volume of equipment sales related to our wireline telecom services and more specifically helix.
Revenues from the media segment decreased 5% to $188 million in the second quarter, while our sports and entertainment segment grew 34% to $45 million for the quarter.
Our adjusted cash flows from operations increased by $23 million for the quarter or 7% to $361 million once again, demonstrating demonstrating our continued operational and financial discipline.
Adjusted cash flow from operations for our telecom segment grew $39 million or 12% to $369 million.
Tobacco is EBITDA was down 2% to $491 million in the quarter, mainly due to the $13 million decrease in EBITDA from our media segment.
Which is explained as Scott mentioned by the increase in our investments in content production and acquisition for TVA group in order to maintain our leading position in the TV market.
Our telecom segment posted EBITDA.
$6 million or 1% to $488 million.
<unk> reported a net income attributable to shareholders of $157 million in the quarter or <unk> 66 per share.
Compared to a net income of $124 million or 50 cents per share reported in the same quarter last year adjusted.
Adjusted income from continuing operations, excluding unusual items or gains or losses on valuation of financial instruments.
Came in at $162 million or <unk> 68 cents per share compared to an adjusted income of $158 million or 65 cents per share in the same quarter last year.
For the first six months of the year and that of course revenues were down 1% to $2 2 billion and EBITDA was down 2% also the $934 million EBITDA from our telecom segment grew 2% to.
$948 million for the same period, an improvement of $15 million over last year.
As of the end of the quarter, our net debt to EBITDA ratio was 327 times up from $2 seven one times reported at the end of the second quarter last year, mainly explained by the $830 million investment for spectrum acquisition across the country in the second half of 2021.
Recently, we amended and extended Quebec or media and video trends revolving credit facilities to July 2025, and 2026, respectively.
Available liquidity of more than $1 5 billion at the end of the second quarter and our growing free cash flows are more than more than sufficient to fulfill our commitments and maintain a very strong balance sheet.
During the first six months of the year, we purchased and canceled $4 2 million class B shares for a total investment of $123 $1 million. Please.
Please note that the board of directors upon termination of the August 2021 program.
Has approved the renewal of the NCI program for an English <unk>.
Additional year since we initiated our normal course issuer bid program when more than 11 years ago actually.
Approximately $53 8 million class B shares have been purchased and canceled.
We thank you for your attention and we'll now open the lines for your questions.
Alright first question comes from Maher Yaghi from Scotia Bank. Please go ahead.
Good morning, gentlemen.
Thank you for taking my question I wanted to ask you first that quickly.
The definitive agreement with Rogers are how are we doing on that then do you have any idea or any view on when we should see it coming out and following up on that I wanted to ask you Bell and Rogers Andy.
Decatur, both that they've been seeing a higher proportion of wireless net adds coming on the higher end side of the brand I E mail or Rogers set aside though.
Or Virgin are you seeing an improvement in the type of customers you see you have coming in or.
Or are we still seeing a lot of the new assets coming on his brand. Thank you.
Thank you Matt.
Our Alaska.
To answer the second the.
And the second question I'll do the first one.
So Oh, you know what it is.
And it's unfortunate you know I tried to emphasize the fact that again, we believe that tobacco is a with a track record that we've been able to show that it's not the it's not.
Wishful thinking even though we've been able to deliver significant performance for the last 10 years.
And in a very competitive environment.
We still believe that you know we should work with.
With the Bureau to make sure and Rogers will convince them.
About you know the strength our proposal. So then therefore will.
We'll keep the this situation you know under.
Confidential part for us.
Because our goal and our objective is to succeed there.
To get the approval as much as fast as quick as possible for us to operate as quickly as possible as we mentioned as I mentioned also earlier regarding the other aspect of the different other asset that we can lineup.
Okay.
So your second question, we're also seeing that phenomenon to be sure in Quebec as well this quarter with our main brand videotron performing very well.
And we.
The difference.
The average price difference between the main brands and need the flanker brands.
As being reduced a little bit but.
But that being said we continue to have very good performance from our from our fifth brand.
So we're actually seeing good performance in <unk> and you saw the performance in wireless for the quarter. So very good performance from both of our brands.
But yes.
A little bit a better performance I would say by the Videotron brand this quarter as opposed to perhaps the last few quarters. So that's probably in line with the with what our competitors were saying to you.
Thank you.
All right next question.
It comes from Michelle do Benoit.
Please go ahead.
We bought helping them on the thanks for taking my questions. The first question for me would be that I would suppose that here you've had conversations with your credit agencies. Following the announcement of your I disagree with the agreement to acquire freedom.
Probably not as big a problem for you since you're you're not investment grade, but are you still confident that our debt you can realize this acquisitions are what the current terms are without issuing equity.
Yes.
Yeah.
Sure.
Talk about the you know the.
Our credit facility renewal.
Yes.
For sure.
Yes, we have obviously you know we have.
An ongoing dialogue as as do all of the players in the industry of course with our with our two with our two credit agencies.
And.
The acquisition of freedom and the eventual acquisition of freedom.
Certainly you know bring in very interesting growth potential.
And and our potential for growth of EBITDA as well and our cash flows.
So we are.
The conversations with both agencies was very productive and they are very supportive.
Of this of this transaction and so we are certainly confident that we can that we can achieve.
The plan without a to your question without having.
Having the need to issue equity for sure.
Okay, Great and then second question is on your D Media acquisition.
You know, we we Havent got the M. P N O rates, yet and Roger Shaw isn't fully settled.
You know theres, many reasons that can explain that but.
It seems a bit early and or maybe it seems like you're absolutely convinced with either a big merger will definitely work or M. P. N O will be economically viable. So why didn't you think it was a it was early to to acquire via media here.
Yeah. It's a good question as you all know I think that you know.
What we should then answer is that you know we we are opportunistic.
And this opportunity presented in front of US I know you'd obviously that you know the epi financial situation is.
I've not been in the past.
More recently.
The interesting thing that you know we have the technology, which is also driving and I tried to mention it.
In my speech.
Conference.
Regarding regulated and nonregulated television.
More than ever I would say that then.
Loud and clear with the C or D C.
Yeah, the regulation of television.
Unfortunately.
From our perspective.
Yeah.
Being a factor in additional factor, which.
Basically you know putting R&D and it.
Kind of an cost not being able to propose.
Original formula we need to distribute debate and Arthur Jones day out of the base. There is probably 99%. It's it's it's it's not.
That's not to say that.
The reality is all about so I'm not an actress that though.
The different programs are not watch.
But workforce due to distributor.
In the unregulated environment.
Where we are facing all the streaming services.
The American.
This is the technology that good but.
In addition ourselves and.
This is what we're working on and this is what we were looking also to introduce in our fifth proposal, where we can bundle services already with all of the services that we're offering.
So yes, it's true that it could be considered early in the process.
But we look forward you know to be able to do the catch on with this situation given that you know, it's it's not impossible that we can build.
In the future.
We are expecting eventually to do it.
It might be to be where we started as a P. T I D.
Since our customer base is that.
I you know, we're considering building and moving from a D. P. I E to a facility based operators.
Boy, they're not shell and I could spend more time on it.
But you know in a nutshell. This is what I can say at this point.
Yeah.
Okay, perfect that's Super cool.
Perfect and next we have a question from.
Drew Mcreynolds from RBC. Please go ahead.
Yeah. Thanks, Thanks very much.
Just a couple of questions for me.
With respect to I guess for Hugh Hugh Hugh.
There's the one time provision reversal just in telecommunications EBITDA. This quarter, just wondering if you could quantify.
To fly that and then secondly.
Good to see obviously, some cost efficiency come through.
The telecommunications margin again this quarter I'm, just wondering how far through are you with your ongoing migration in it.
Projects and then lastly, just on Capex for the full year video trailing Capex, presumably you are still comfortable with that being <unk>.
Stable year over year.
Yeah.
Thank you for your question.
Yeah, Yeah, I'll take that.
Firstly, yes, there were a couple of of there was a reversal then there was a new provision on a couple of our ongoing lots of well one one settled in.
And another ongoing lawsuits. So there were the needle a little bit of back and forth in provisions, but all in all when you know that the mall. It's it really is not material.
In terms of cost efficiencies.
Yes.
As we said and you mentioned it yourself through them I think we're starting to see both on the Opex and on the Capex side.
You know the results of our of our ongoing.
The initiatives that we are that we have been discussing with you guys or for a for a few quarters now.
And.
We're not quite there yet I think you can expect you know the the momentum to continue and see further improvement on that because we are you know where it is it's an ongoing as you know it's an ongoing.
It's an ongoing process and and we continue to find efficiencies throughout the throughout the company and throughout the system and should be in a position.
<unk> to continue to improve margins going forward over the next few quarters.
In terms of Capex, yes, we are still comfortable with that.
Cable Capex for video trials for our <unk> for the year of 2022 for sure.
That's great. Thank you very much.
Okay.
Alright.
Two we have a question from Tim Casey from BMO. Please go ahead.
A couple for me thanks, good morning.
Your call can we just go back to the <unk> media a bit.
And just.
Are you looking at this primarily as.
And expansion.
Platform that you can leverage.
Through various foods products under the province, or how should we think about that and can you also I understand you know I recognize it's.
It's a small private company, but can you provide some transparency on how much you paid or some indication of any free cash flow drag that might come out of the media going forward.
And my second question Pierre Curl relates to the process.
With respect to the competition Bureau, you know I recognize youre not going to negotiate on a public forum like this but.
Just your your thoughts on the likelihood that this process will go through full tribunal and and if that is the case you know your appetite for that given that the freedom itself will lose out on.
The two major selling seasons in 2022, and presumably you know there'll be value implications there or any thoughts you have on that would be would be interesting. Thank you.
Yeah.
So.
First of all I would say.
Regarding eating meat.
I understand that you'd like to have more can fall into <unk>.
What I would say.
It's not material so.
You should not unexpected at all.
Any kind of a surprise, it's about balance sheet or goodwill or whatever.
Yeah Yeah.
Got it and then.
We were really interested in the technology.
We found.
And this.
This company is run by individuals.
In Toronto.
Eastern origin.
Origin connection.
Are you able to get technology.
Where are we.
Hum.
Let's call it cheaply when we compare about Gee it cost.
Cost in North America.
And that's moving at this stage you know pretty interesting.
It's certainly something that you all took us alright attention.
And for which coupled with the fact that they already have all the interconnection with France.
Telecom operator in many locations in Canada.
Do.
Thank you.
The agility.
Loss service, depending about what will come from the N. P. I know Paul if we were to sign a private agreement with telecom operators, which we are well still expecting to do.
Unfortunately at this stage the telecom operators that have been always against competition are refusing to negotiate with us, they're saying that they're waiting for the framework that we establish it published about the C O T C.
We respect that unfortunately, we think that it's not in the best interest of all of us, but it's their decision.
We will look for jobs.
Additional asset.
If we need it and we will continue to be prudent.
We're not going to consider launching in all of our full service.
Which will be a drag.
Our expenses are.
Our financial results, we're gonna go slowly prudently as we've been doing.
Awesome.
In terms of competition Bureau.
I guess, it's just a delicate.
Not running to show.
And that kind of thing that we are in complete journey, but you know we are far from being an all in play and we're not playing directly with the competition Bureau.
Sure.
And the competition Bureau.
Even before the announcement that freedom mobile.
Statistics regarding.
With the market the wireless market, which obviously we answered.
With as much as.
Whats the good numbers and good statistics that I'm. The one that we've been experiencing for the last 10 years and we will continue to do so.
We work in front of them.
Making sure that they understand all the wherewithal of our.
Sure.
Brian .
Uh huh.
Are they still working on it for sure are we still working on it for sure and we will continue to work with Rogers to make sure that this transaction will move forward.
And then you know we're not in control of up their game.
And it's true that.
Pending how long the process will take that could be that could have an effect.
The the subscriber.
And the commercial strategy that freezes as now hugely.
I guess that you know Shaw and Rogers should Doctor business.
Business as usual.
Was.
What will they put more emphasis on shovel, while then on freedom, we don't know.
It is a matter of all.
I would like to be positioned in front of the Bureau.
These things are good.
All sat in a strong message to the Bureau.
Pending the attitude that they will do.
We'll get it.
They will adopt.
Moving forward for the transaction to close and I guess Scott.
We expect them and we dissipate that they would like to see the transaction close as soon as possible.
Thank you.
Yeah.
All right next we have Matthew Griffiths from Bank of America. Please go ahead.
Hi, Good morning, and thank you for taking my question.
Maybe focusing on on wireless for a second.
Maybe we've seen others in the industry you know have a report you know large benefits them to our two in recent quarters, you know return to roaming being the largest contributor but underlying kind of planned migration.
Also chipping in there you know me.
You're obviously benefiting less from the roaming maybe you could kind of highlight a little bit about you know.
And what Youre seeing in terms of planned migrations, whether youre seeing consumers trying to save on their monthly bill given the overlying macro environment.
And you know whether you see there being continued room to move higher.
Higher as we go through the year and into next and then also just you know as we look into Q3.
Just what did you see in the early part of Q3, especially given you know the network issues that you.
Alluded to with Rogers did you were you guys a net beneficiary of that do you see that continuing it was it a blip just any kind of color on what you experienced in the market would be helpful.
Okay are you.
<unk> would you answer the first part of it there.
Question I will ask I will answer the.
And I think that's why we keep saying that.
Absolutely.
Yeah.
The last few years and that's what.
I would say that that's a general trend that you know at the beginning of Q3 at the very strong.
And we look forward to continue.
Hugh.
We will be with mining.
Good it is well make sure was that we keep our fair share.
Described earlier.
Yeah, the biggest market share growth gross to net.
When we look at it they need to.
To do this.
On the op side there.
Now some comments on this.
Yeah for sure.
Sure.
On the roaming is as you pointed out yourself, Matt you know and we've said this in the past. We are you know we don't benefit from roaming in as much as our national competitors for sure. So as much as we didn't you.
We weren't impacted as much Ah at the beginning of the pandemic well just now of course, we're not.
Benefits from.
As big a pickup but they are they are currently benefiting on.
On the way back up you know, which is which is normal.
I think what we're seeing in the market I mean, we continue to be a it can be aggressive we continue to win as you saw 32%. That's that's pretty stable I mean, that's that's amazingly high to me, but it still is pretty stable over the past few quarters, where we continued to our two brands together again, you know about a third of the market.
<unk> of our gross ads and we're seeing you know what people you know in terms of in terms of price.
Priced packages people are.
There's some stability some people some people moving up both brands are being.
Maybe a little bit better positioned in terms of the pricing now so that helps us a little bit on the overall on the overall large human margin.
But we're seeing.
Some of it.
It continues to be a competitive market I mean, we've said this in a way that.
It's been for quite some time.
But we you know we we definitely have all the tools and all the.
Munitions to be able to successfully compete in this.
In this market that we are that we see when we see our competitors our results.
We can only conclude that it's not the case in the end and in the rest of the country.
But for short here continues to be quite competitive, but we continue to win the win most of it so.
We're very pleased with the the continuation of.
The wireless market right now.
Okay, great. Thank you so much.
Alright.
Next we have Stephanie price from CIBC. Please go ahead.
Hi, Good morning, I was hoping to ask a similar question on the wireline competitive environment.
How do you think about competing with the fiber offers here and is there a plan in place for fiber and fixed wireless in your longer term strategy.
I'm, sorry would you repeat your question and actually the day right.
Sure.
The wireline competitive environment, and how you think about competing against fiber offerings that are in the market and whether there's a place for fiber and fixed wireless in your longer term strategy for wireline.
Okay I understand the first one first.
First part of it then.
So.
Well I'm always its been competitive I, probably go back and this is where you know we've been seeing a D. I S amount of T. P I E.
This is the reason why you know we launched an internet serviced out of our fifth offering which was at the beginning only dedicated to wireless and in fact, you know what we're seeing in terms of achievement.
For Internet, Yeah, I've been good, especially when we couple our offer of wireless and Internet and we look forward to continued to do this.
And that would be also certainly one of our strategy that you know we look forward to propose a when we will be in a position to offer our services outside of our historical area.
And Quebec.
I'm not sure that I add on Fortunately the second part of your question, which was referring to.
Six competitor in wireline.
Okay.
Yeah.
Yeah, I was asking more about Quebec in terms of competing against fiber offerings, and whether you're considering putting in place more fiber and fixed wireless in Quebec as part of your longer term strategy.
Fixed wireless.
At this stage.
Yeah.
We're investing as I mentioned and we've been doing it for them for the last few quarters.
On wireline in fact, you know we are too okay. That's okay sure behind machine.
In a position to close about 37000, new new doors at new potential, which we look forward to to offer.
That's you know, we don't think that we would need fixed wireless.
Since you know will go down directly to the customer.
These are subsidized program.
We also have this program where they are the biggest.
Operator, while the operator with the biggest amount of.
Okay.
They'll ability because your goal was there also a.
But you know we look forward to start and in fact, we already have.
New customers that already are connected to this new fiber.
But I would say, it's anecdotal for the moment.
We certainly are going to be in a better position in Q3 and Q4, we look forward to have a very high level of penetration.
On this area, which were previously only service either by explore on that are either by by the AR telecom incumbent with the D. S L technology or dishes for TV.
This is of great interest for us in the upcoming quarters I don't know if you have anything to add.
And then maybe just one comment one thing Oh, Thank Dan can't tell on the and Stephanie on the first part of your question.
The wireline competitive environment and in light of the.
The fiber.
That's one thing.
To remind you that I mean, you know fiber companies or I mean competition from fiber I mean, there's nothing new to US I mean, you know our main competitors started laying down fiber to the home in the Quebec City area more than eight years ago, you know Ed.
And and <unk> and we also in our in some cases don't forget that in some in some that work extensions. We also go in.
You know all the way to the home.
But because of our technology, we can afford it in many cases to go to the node.
So economically it makes more sense for us to do that.
Depending on the competitive environment in that area. We sometimes you know lay down more fiber so I mean in all of them.
I guess my point is that we've been we've been dealing with this for you know for many many years and I think we've demonstrated that we can successfully.
Compete.
Against our main competitors are very well funded development and you know and fiber layout.
And the overlap is very high in Quebec are compared to the rest of Canada, you know close to 90% overlap. So you know I think our number show that you know were quite successful in the.
In in competing with them on that front. So I mean for sure. It is it continues to be to be competitive in wireline as well but.
Again as to our comment on the on wireless and we believe we have all the right tools to win them.
And I would point out also yeah, and you're right to focus on the fact that you know the fiber expansion out of of Bell had been there for many many years, but now.
If you look in light of the.
The quality resolved released this morning.
You know the IP TV increase was it was not significant and track you know what.
What we've been seeing is certainly a kind of a flat number and from the Internet and order increase we don't know where I come from is it coming from from Quebec or Ontario.
We're seeing basically in Quebec on regarding the the competitive aspect is a matter of price is certainly not a matter of quality I know Dallas, making big noise regarding five or five D or whatever.
We certainly have a very strong technology, whatever let's go out and find which we also walk through each of our customers are basically the main driver here is its pricing and when we survey our customers. When we survey the market the various reasons to change or to move.
One supplier to the other from one company to the other.
Will be the pricing equation.
Thank you for the color.
Great next question comes from David Mcfadden from core Mark Securities. Please go ahead.
Oh, great. Thanks, Yeah, I have two questions are first of all bill.
I was wondering if you could comment on the debt that you've arranged to buying freedom, assuming you can do so.
I'm just wondering if it's short term long term in nature, and what kind of doubt. It is and then secondly, just on the Internet and that as you know they were flat in the quarter I bet. You indicated that in July are you seeing a pick up and I was just wondering are you seeing a pick up similar to last year's.
Thanks.
On your first question David the definitely we've arranged that we've that we've had committed for for the freedom acquisition is they are actually to give ourselves the flexibility.
It is.
But as bank debt over a.
A certain number of different lengths and time to the issuer to have some flexibility over the next few years are two to repay that debt and or to replace it with us.
Different instruments for the markets.
Evolve.
Get better in certain other areas. So so we have afforded ourselves I think some are some are some very interesting.
Freedom on that front.
No pun intended to.
Sure that we've got a we've got a very flexible debt instrument should the acquisition of freedom.
Serialized.
On the Internet. That's your second question, Yes, we are seeing.
As we said in our script.
Oh is that that phenomenon that we used to talk about pre pandemic of the Q2 being a living through.
A little bit more disconnect and then reconnect in Q3. So we are seeing this more this year, but certainly as compared to last year and our numbers in July so far look Oh, they look pretty good so.
Clearly proving that this is the case again this year.
Okay, and then just a follow up on the on the bank debt.
So there's no requirement that you wouldn't have to finance them.
A large amount say within the first year or so you've got you've got tied up.
More medium long term kind of debt financing.
Yes, that's correct, where we have a bunch of yes. It's.
You know some of them some of them we've extended over the next few years.
To make sure that we have the flexibility and no big no Big tower over the next couple of years for sure.
Okay alright, thank you.
Okay.
Next we have Vince Valentini from TD Securities. Please go ahead, yes.
Yes. Thanks.
First I just want to clarify so 90% of your cable territory is passed by fiber to the home solution from the telcos and I just reiterate that you ask again, because bell gave a number of 56% on their call. This morning, and I don't think that applies to you yeah. Yeah. I know it was brought to my.
Attention by one of your colleagues and because I didn't listen to the call. Unfortunately, but yeah. So clearly in Quebec, and we've been saying that it only just proves what we've been saying for many years you know the situation the competitive situation and even the technology situation's different here because our overlap is 87%.
Check to begin with the with our CTO. This morning, so when they referred to 56% I assume that that was referring to the whole of Canada. So clearly.
We are and and and it makes sense then because as you know they started here you know they started in Quebec city of Montreal before.
Going to Ontario elsewhere, so yeah, so where the overlap is much higher here than in the rest of Canada for sure great.
And.
If you said this in your opening remarks, I apologize I missed it but did you give any clarification on retail internet ads in the second quarter relative to wholesale and retail or where you may have lost customers about the retail was positive.
No, we did not give that level of detail, but but but it is a.
It certainly is true the situation that we mentioned a little bit last quarter, certainly continue this quarter not not as much but I'm certain that that phenomenon still.
It is still it's still still exist for sure okay.
And one last one but if a clarification as well in your opening remarks peer Carl you said the competition Bureau has said that they don't believe Quebec or as a buyer is.
As a sufficient remedy.
Can you just clarify that I'm, not I'm not aware of them, saying anything.
Rejected the deal.
Two Quebec, where we're getting involved and they said the remedy proposal that was not good enough, but since then to my understanding they are just investigating and deliberating and they haven't really said anything definitively.
You're aware that they've come out and actually you said they've reviewed the terms of your deal and they don't think it's good enough for competition.
Well this is our understanding Oh do we have it from the old smells.
The answer is no and again you know this is why you know we're still working on it.
And we wanted to make sure that you know we will bring the arguments to convince them that you know.
You will remember at certain point, you know they said well they will not going to be in a position to bundle them. So.
We are emphasizing the fact in.
Regarding the.
The filed with the media.
We now are in a position to do so.
You were negotiated.
But we don't want to go too much in detail, it's about the arrangement with the with Rogers, where we will also have access.
Now to our to the wireline.
So unfortunately as I mentioned earlier I would not be able to do.
To give details in terms of negotiation, but what we're looking for is to be able to map as much as as issues that.
Were raised.
By the Bureau, and.
Finding out you know how we can.
Give them a positive answered that for them will be a key element to move forward and get their approval.
Yes.
Yes, thanks for that clarification, that's it for me.
Alright, and the last question we have in the queue comes from Arvind gone up at the year from Canaccord Genuity. Please go ahead.
Thanks for taking my question I wanted to go back to the cable margin.
I think it was mentioned earlier was it was definitely a meaningful.
Strengthening.
I think of about 150 basis points can you maybe give us a little bit of a breakdown in terms of.
What proportion of it came from the core cable.
Business as opposed to wireless so that we can perhaps better appreciate the.
Yes.
The benefit on the cost side from your streamlining initiatives and then when you look at the second half.
We sort of anticipate similar magnitude improvement.
And I ask particularly because I think many of US remember Q4 was a bit of a step down last year. So you have the benefit of that sort of a lower base as well.
Any color on that would be helpful.
Oh, Yeah, yeah. Thanks for your question I, just wanted to make sure maybe on the first part of your question I thought you were talking about cable margins are or wireless or both I I'm, sorry, maybe I misunderstood the specifics.
Of your question.
Yes, I was referring to I mean, obviously, what you reported is that the total telecom margin improvement, but I was trying to get a sense.
So okay, what proportion of it was sort of the core cable business as opposed to wireless.
Well I mean, the you know on the a good chunk of it is obviously on the wireless side.
But the margin and you know I think we've we've clearly given the numbers I mean, 12% more EBITDA and in wireless.
But we're also pointing out that's on the on the wireline side that.
But the the margin that has picked up I mean, there is the the hit due to the to the equipment that we talked about so certainly a hit on revenue due to the slower helix.
Migrations that we talked about which obviously draws.
A little bit to the.
To the margin, but if you look at service margin.
In wireline.
There is an improvement this quarter finally in no way and this is what we have talked about that we would be at some struggles there as we were as we were investing in a number of platforms.
And our initiatives of cost reductions had not fully you know.
Gone into place, but I think.
On this.
And in this quarter Youre, starting to see some some nice momentum on both wireline.
Wireline and wireless margin wasn't the case a wireless it continues to grow of course, but on the on the wireline margin issues that we had talked about in the past I mean, you're you're finally seeing an improvement in margin, which to your I think to your second part of your question.
We are expecting to continue because we are continuing to work on a number of these initiatives that are <unk>.
Creasing, Lee, bringing bringing us are bearing fruits, perhaps I should say.
So we're certainly more optimistic on margin.
Or the next couple of quarters.
Thank you and just two.
Just a quick follow up on the buybacks I mean, you stepped up buybacks in Q2 relative to Q1.
The transaction should we sort of anticipate a little bit of a slowing until we have clarity on that front or does that kind of continue unabated.
Okay.
Hum.
On buybacks and it is it's not it is something as we said in the past where we are opportunistic.
And we believe that our stock is and we continue to believe their stock is undervalued.
So.
No.
It's hard to see in order to decide today and we haven't certainly haven't decided to do what we're going to do but we should.
I don't think it's a it's unimaginable.
Unimaginable that we are the we can think of a continuing buybacks.
For a while as our stock continues to be undervalued.
Great. Thank you.
Okay.
Good so are we thank you very much all and.
I will now expecting to talk to you again after our Q3, thank you and have a nice day.
Thank you.
This concludes the <unk>, Inc. 's financial results for the 2022 Q2 conference call. Thank you for your participation and have a nice day.
Yeah.