Q3 2022 Quebecor Inc Earnings Call
The conference is now being recorded.
Okay.
[noise] Good day, everyone and thank you for standing by and welcome to the Quebec or Inc. 's financial results for the Q3 2022 conference call.
Her introduce you see MA Chief Financial Officer of cubic Inc. Please go ahead.
Ladies and gentlemen, and welcome to this Quebec our conference call.
I am not and joining me to discuss our financial and operating results for the third quarter.
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.
Access details are available on our website at Triple W. Quebec, our dot com.
<unk> will be available until February the third 2023.
As usual I wish to inform you that certain statements that we may make on the call 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.
I will now turn the floor to <unk>.
Net.
Again, good morning, everyone.
Before going into the details.
Our operational and financial performance.
I'd like to reiterate our commitment and motivation to extend our telecom services across Canada through the acquisition of freedom mobile.
Although the mediation last week did not bring us any closer to an agreement with the competition Bureau, we believe that the upcoming competition Tribunal hearings will demonstrate clearly that the acquisition of freedom Bank. They call Walgreens does the rest of Canada the housing com.
Additionally, lower prices and I have been the norm in Quebec for many years you do we do it all over in that list and successful efforts to offer connector is the best client experience digital environment at the lowest prices.
On the regulatory front, we're pleased with last week, the ITC decision related to the implementation of the facility based <unk> access service and associated terrorists nor does it.
Suffer solidify sorry, which further solidifies if you do it all right to initiate MVA no service, allowing us to extend our wireless service outside of Quebec, and eventually complete and improve freedom network coverage.
We have already initiated the process to seek access to the incumbent network as soon as possible and we expect the incumbent and negotiate wholesale NPL rate in good faith to come to an agreement quickly.
Should the incumbent decided to unduly drag out the process.
That is unfortunately too often the case, we will count on the CRT to arbitrate without delays so with that <unk> can finally become.
Canadian reality.
With respect to that CBD.
I would like to comment on the September 16 order from the Governor in council to refer the matter back to the <unk>.
For reconsideration and Iran.
While the governor in console and concept underlying that TICC should consider out to ensure that the national broadcasters continued to make a significant contribution to the creation presentation and dissemination of local news original French language programs and programs.
<unk> by independent producers the decision do not address the essential question concerning the control of the Petro Canada on advertising revenues and the need to tighten its mandate.
The government must allow private companies to survive by abolishing advertising on all CDC had to kind of adapt platform, Jeff add once decided for a CBC radio NDA equivalent in France in 2016.
Finally.
Can they call welcome the tabling of 18, Bill by the Minister of Canadian Heritage.
The Bill is the outcome of numerous representations made by cannot call and many other Canadian media organization and Association.
It would regulate negotiation between the web Giants and news outlets to ensure fair and equitable compensation for the use of the content created by the latter.
Quebec or add long argued that to preserve the industry sustainability and vitality original content from the various platform add to be included in this bill.
Creation of a payment system.
Necessary in view of the web Giants market dominant these platform user content produced by Canadian news organizations to generate a significant portion of the interactions of their network and should be required to pay a fair price for it.
I will now review our operational resort results, starting with our telecom segment.
After being named Quebec, most admired telecommunications company 16 year in a row <unk> reputation study.
If you need it all once again proudly stands out for the excellence of its client experience with two new distinction.
First we.
If you do it all at just been named a telecommunications company offering the best customer service and good bye.
By a new leaves a flash survey that ranked.
And about and other competitors.
Furthermore, the result of the CRT fee.
Ah repeat.
Our D C.
2022 mystery Shopper project.
<unk> recently announced.
And to do it all ranked first among Canadian providers in many category.
First.
Overall customer satisfaction second.
Satisfaction rate regarding clarity and simplicity of an information provider third.
The company proposing the most appropriate services.
Sure.
Company offering its customer and uptime to make an informed decision and fit.
The company offering the best advisors.
As you know we have invested heavily over the past 20 years.
Fabless customer service and satisfaction as a strong competitive advantage for them to do it all.
It is clear from these independent finding that this solid reputation will base on which we have been still at home growth and success over the years still hold true today and bodes very well for our future as Canada, most trustworthy telecom provider.
In July 2022.
It's all acquired the media and the independent telecommunications provider that is well established across the Canadian market, and which offered innovative bundle solutions at competitive pricing.
E media one of the key partners that will help us speed up the implementation of our plan to create more competition in Canada by offering advantages bundles that give Canadian consumers more choices and lower prices.
As previously announced we accelerated the deployment of our project.
ISP as we now have underway, 94% of the total kilometers to be deployed.
Despite a tight labor market and a challenging supply chain environment.
We are increasing the rate at which we are connecting new homes and we will continue to do so over the next month to ultimately deliver high speed Internet access to 37000 households, and seven municipalities across the province.
Our <unk> deployment also remain very much on track as we keep adding new operational sides and widening our coverage outside our main urban areas.
Turning to our third quarter results.
We have recorded another steady and solid operating performance with a total growth of 99000, RG use which include.
The acquisition at 50000, the RG use from the media.
This is 18000 more than in the third quarter last year, excluding the media and represent an increase of 144000 RG yard RG use year over year.
In wireless telephony, we recorded 36000 net adds during the quarter, which bring the last 12 months growth to what Ive read and 26000 New line.
And our total lines to almost $1 7 million as of September 30th.
Excellent performance in the context of significantly lower integration and population growth in Quebec as as compare to the rest of the country.
Once again, we captured the largest combined share of gross adds in Quebec with 32, 5% for our two brands you do it on FID.
According to LNG survey, thus continuing to build market share and goodbye.
Our wireless EBITDA increased by 21% in the quarter compared to Q3 2021, a clear indication that we continue to strike the optimal balance between aggressive and profitable growth.
Consolidated wireless RPM for the quarter improved by 70, 76 cents or one 9% over the same quarter last year due to higher planned mix, especially for FID.
Lower discount and somewhat higher roaming and data usage revenues offsetting the diminishing daily.
The effect of <unk>.
In wireline, we are continuing our efforts, which we mentioned last quarter to maximize our <unk> by.
By better positioning our brands and optimizing the pricing of our Eagle and <unk> platform.
These initiatives have led to lower <unk> activation in the quarter with a rapidly improving wireline service gross margin.
Our TV distribution RG use increased by 9000 in the quarter due to the acquisition of V media, but excluding the 17000 V media TV subscribers, we managed to reduce our cable cord cutting for a third consecutive quarter and by nearly 40%. This.
Quarter we.
We also managed to reduce power cord cutting in our our margin wireline telephony service by almost 30% compare to Q3 last year.
And internet.
We recorded a growth of 57000 customers, which include the acquisition of 36000 V media customers.
Internet subscribers year over year growth was 70000, despite the continuing intense competition, especially at the lower end of the market.
Internet ARPA increased by 47%.
Our 9% over the last year and sequentially increased by 55.
From Q2, overcoming the dilutive effect of <unk> and lower planned mix.
OTT video subscribers increased by 13000, this quarter fueled by a 39% of subscriber growth.
Our new platform dedicated to exclusive unscripted lifestyle documentary and entertainment content, clearly demonstrating the strong appetite for new and original content and connect.
Turning to our financial results.
Our telecom segment generated $382 million in cash flow from operations in the third quarter, an increase of 13, 13% over the same quarter last year with EBITDA growing two 7% and EBITDA margin, reaching 52%.
Compared to 57% last year.
Revenue increased by three.
In the quarter as compared to last year, mostly due to wired wireless and Internet services revenue and wireless equipment sales offset by lower equipment sales, resulting from a slower <unk> growth as we optimized our two brands pricing to improve.
<unk>.
R D.
Opex side.
Our cost reduction initiatives are paying off with a 7% decrease in the quarter and translating into our increasing industry, leading EBITDA margin.
Okay.
Telecom Capex spending was down $32 million for the quarter as compared to Q3 last year.
As we continue to focus on our strategic priorities and as we operate more efficiently by continuing to lower our cost structure, while increasing our investment level on key initiatives, such as LTE advance five G and network extension.
Turning to media, our third quarter results continued to be impacted by a difficult advertising contacts in a regulatory environment environment, sorry that puts us at a disadvantage and RFID again, the web Giants and the national broadcaster.
<unk> <unk>.
CBC do Canada.
Funded by the state with more than $1 billion a year.
Brookdale experienced decrease of $20 million in revenues and $17 million in EBITDA for the quarter as compared to last year.
In order to compete and maintain our leadership position, we continue to invest significantly in our content offering both our traditional and digital platform and these investments are paying off.
Evidenced by the one nine for $1 nine market share increased to $40 one shares to the D var market.
Sorry, <unk> network and specialty services.
I will now review our consolidated financial results.
<unk> for the third quarter <unk> revenues reached <unk>, one 4 billion.
Down 0.4% from last year.
Revenues from our Telecom segment were up 0.3% to 942 million, mainly due to the increase from mobile services and equipment and Internet access revenues from the media segment decreased 11% to $170 million in the third quarter, while our sports and entertainment segment.
Grew 17% to $57 million in the quarter.
Our adjusted cash flows from operations increased $37 million in the quarter or 10% to $403 million once again, demonstrating our continued operational and financial discipline.
Adjusted cash flows from operations from our telecom segment grew $44 million or 13% to $382 million.
Quebec quarters, EBITDA was down 0.4% to $518 million in the quarter, mainly due to the $19 million decrease in EBITDA from our media segment, which is explained as <unk> already alluded to by lower advertising revenues lower volume and film production and audio visual services and the increase in our.
<unk> and content production and acquisition for Australia in order to maintain our leading position in the TV market share in Quebec.
Our telecommunications segment posted EBITDA up $13 million or 3% to $490 million <unk> reported a net income attributable to shareholders of $178 million or.
Or <unk> 76 per share compared to a net income of 107 $73 million or <unk> 71 per share reported in the same quarter last year.
Adjusted income from continuing operations, excluding unusual items and gains or losses on valuation of financial instruments came in at $175 million or <unk> 75 per share compared to an adjusted income of $176 million last year or <unk> 73.
<unk> per share.
For the first nine months of the year, Quebec, <unk> revenues were down 0.7% to $3 $35 billion.
And EBITDA was down one 6% to 1.45 billion.
EBITDA from our Telecom segment grew 2% in those nine months to $1 44 billion for the same period, an improvement of $28 million over last year.
As of the end of the quarter, our net debt to EBITDA ratio was 323 times up from two eight times reported at the end of the third quarter of last year, mainly explained by the $830 million investment for spectrum acquisition across the country and the third and foreclosures and last year.
Our balance sheet remains very strong with available liquidity of nearly $1 7 billion at the end of the quarter and growing free cash flows that are more than sufficient to fulfill our commitments and fuel our development plan.
During the quarter Videotron has secured the committed debt financing required for the acquisition of freedom.
During the nine months of the year. The first nine months of the year, we purchased and canceled $7 1 million class B shares for a total investment of $203.
$8 million.
Finally, the board declared a quarterly dividend of <unk> 30 per.
For class, a and B shares, which represents a payout of 34% of our free cash flows. This year in line with our target, which we've enunciated a number of times to be between 30% and 50% of our free cash flow.
We thank you for your attention and we'll now open the lines for your questions.
Alright first question comes from drew Mcreynolds from RBC.
Please go ahead.
Yes, thanks very much.
And good morning.
A couple for me.
Just first.
Maybe on the media.
<unk> disclosed somewhere can you can you give us kind of the rough revenue contribution in margin just just for modeling purposes. If you can.
And secondly, secondly, just on wireless market expansion care, Carl alluded to obviously, Quebec not benefiting from.
A lot of drivers.
That are underway outside of Quebec across Canada, but what are you seeing in terms of expansion here.
Are you still seeing some in Quebec, it's just not as strong as the rest of Canada that'd be great. Thank you.
Okay on the <unk>.
On your first question roughly.
Roughly speaking revenues of $7 million and margin of about 400000.
EBITDA margin on the EBITDA for <unk>.
In the quarter.
Onto your okay onto your second question I think that's how we're doing that.
Well as you know the auction took place and they were condition.
<unk> recent decision by the TICC released.
About two weeks of March with less than two weeks ago I.
Get more details on who will be.
Does not or will be available or will have the right to expand.
So.
We're not expecting.
That we'll see.
You need to be a telecom operator already.
So reducing the amount of a possible.
Players in the <unk> field, you all know that we acquired spectrum in BC, Alberta and Manitoba.
And Ontario. So these are the territories right now where we have the capacity to start offering.
<unk> service, we expect as I mentioned that the incumbent but unfortunately, our experience previously would not.
To this environment that they will respect what the CRT see they've been saying is to negotiate in good faith, we will be able to establish.
A decent rate for which you know I guess now.
All of the CRD.
Government and.
The <unk> or the industrial administer expects to see competition, taking place in the wireless much bigger in the future and we intent obviously to be a partner there, but we.
We'll not give any.
<unk>.
Preliminary strategy.
Our marketing given that obviously, we're in a very competitive environment.
Okay.
Yes.
Just two follow ups sure Charles if I may in terms of the timeline before it all goes to first.
Our final offer arbitration with the CRD if it does that do you have any sense of.
What that timeline could look like and then.
Second question, just sorry back to the wireless market expansion. Thanks for those comments.
Alluding more to actual population immigration.
Expansion inside the province of Quebec in terms of the wireless market. So just two follow ups would be great. Thank you.
Okay.
Well first I would say that it's not excluded that we can get.
An agreement with a provider.
Not being for us to go in baseball arbitration.
If we were to go that route.
Unfortunately, it will continue to take some months how long.
The period will be will it be one or two quarters three to six months.
Obviously, you can imagine that the shortage would be what we will certainly preferred we're not completely in control of the process.
Unfortunately again experienced in the past all tie all type of things that are slowing the process from.
From the incumbent side.
Well this strategy continue to be the situation.
I don't know, we expect not a week, we could think that the.
Incumbents will listen a little bit more about what is the CRT D. C mindset and also the government as you seeing incumbents challenging decision in courts, and unfortunately, while unfortunately for us fail to be able to be successful in.
All of the court.
For the Quebec market in Nevada.
As you.
Bob should we call. It a debate of this is certainly a question market about what Quebec is ready to take as the number of immigrants.
There was a quote on quote to social and political debate, taking place as you've seen the Canadian government decided or said that they will get.
They will admit 500000 immigrants on a yearly basis for the upcoming three years or roughly or the Quebec government said they would.
They would.
It would consider 50.
So as you can see it's a big difference.
Is 50000.
Good enough for US you know, we're not again, they're controlling about what everything is taking place. We will certainly continue to market our products and we think that we're well positioned and again from our two brands <unk> and <unk>, but certainly.
Meanwhile, we should say that since the mature mature market and this is therefore.
We strongly believe that we need to.
Go elsewhere.
In other regions in Canada.
Where the competition is much lower and for which we believe that we'll be able to get a significant market share.
Oh.
The wireless market.
Understood. Thank you very much.
Alright. Our next question comes from Vince Valentini from TD Securities.
Please go ahead Vince.
Thanks very much first question is on Internet revenue in <unk>. Some people call you mentioned.
<unk> increased 55 from Q2 to Q3.
Jim we get a bit more detail on the moving pieces there I assume.
Some of that is mix changes with with fish some of it may be people moving to higher tiers.
I'd be interested in the if youre seeing some traction on just net.
Pricing gains, which could mean price increases you've made but not giving us weigh as much of that is you may have been previously throughout two promotional discounts is there are you seeing a bit better traction on that front.
Yeah, Vince it's I mean, it's a bit of everything honestly it's.
Price increases, yes that we are benefiting from now.
For the whole of the quarter.
Mix mix as it has been positive as well.
People want more and more performance and keep wanting more.
More and more and more speed more and better performance.
And and discount yes.
Less discounts I think we've been certainly in this quarter, we're seeing that we've been a lot more agile and a lot more efficient at it at reducing discounts. So it's basically a little bit of you know what.
With everything you've said, which leads us to.
That's pretty good 55 <unk>.
Sequentially is a is a pretty good performance.
It remains a very competitive market for sure.
Especially on the lower end of the market.
What we're seeing certainly.
As part of this the the.
They're redeeming factor I would say of this market is that it.
That's the top end of the of the market keeps keeps performing very well and we keep.
Being able to to drive some some some are few up on that on that front. So I think that's a.
That was a good quarter on Internet for us.
Great.
<unk>.
Moving to the wireless expansion and the proposed deal.
When you strip away some of the what I would call a strange legal tactics on all sides.
It seems like the core issue is ownership of cable or fiber assets being linked to.
Our wireless network.
Is it possible for you guys just share any thoughts on that as the ones you seem quite happy with with some sort of leashed access or or some other way of accessing somebody else's.
Infrastructure for backhaul are you willing to provide any commentary on how comfortable you are with that type of framework relative to some people's views. It wireless doesn't work unless you own a cable network.
Yes, I'll try to give you.
A little bit more in the meantime, you can easily understand that you know, we we should refrain ourselves.
Regarding the situation in front of the court well first of all the way we should say in Europe , you know that Vince and I guess that everybody should know it.
No.
Our freedom.
Operator.
At the beginning mostly in Ontario.
And as of today, my understanding is sha doesn't own any wireline infrastructure there.
So, Ontario is still.
Large portion of shop is wireline.
What the Bureau said.
Necessary to compete well find out.
That's in front of the court.
To demonstrate that and we will listen to what they are trying to achieve in the moment. Unfortunately, we're not able to find out what will be their arguments are.
But what we should know also as you can imagine as.
We negotiated.
With the Rogers deal.
Paul for you.
Consideration.
To take care of what the competition girl was raising.
And making sure that we will access.
Two our infrastructure.
As efficiently and competitively.
Possible.
So those agreements are already negotiated.
And we look forward to get the green light to close the transaction.
Fair enough one last one if I can.
[noise] DOCSIS roadmap is call. It I'll say, it's been topical recently with different players, suggesting one route versus another and some people thinking all fiber is the only way to go can we just get your latest thoughts on what videotron plans are on.
Whether it's going to be mid split tie splurge.
Dx USD or or.
Or a move to all fiber gradually do you have any updated thoughts on what your technology roadmap is.
Events are becoming an expert on file.
Technical <unk>.
Maybe another cut on it for us.
[laughter].
Yes.
Well quickly what we can say there.
First of all as you know, Australia, which is what I was referring to is completely Cta show its spot technology, and we will continue to deploy as much as <unk> fiber to home.
Where we have the capacity of doing so.
The HFC coax side, we're working very closely with cable labs that also are introducing technology that will increase.
The speed of what the service and DOCSIS.
Is being able to service customers.
Since.
The implementation of cable and Internet.
Internet in 2000, so as you can imagine cable industry is pretty vague, we got we Americans with Comcast charter and much more so we're working very closely with them on top of because he called Rogers and Shaw to make sure that the case.
<unk>.
And technology will remain competitive in the future and being able to service our customers with the best product at the lowest prices as possible.
Good for now thank you.
Yeah.
Alright. Our next question comes from Stephanie price from CIBC. Please go ahead.
Hi, good morning.
I don't know wireless expansion, assuming a favorable outcome for the Rogers videotron here.
Do you need to start executing on the national wireless strategy.
Submission, it's clearly it sound plan, but I'm looking for more color around your readiness for the day to day operating perspective in terms of regional.
Regional teams et cetera.
Uh huh.
Quickly as Stephanie.
I'll say that we are.
Despite the fact that the transaction is not.
No.
Uh huh.
We have a pretty good idea about how the networks work what kind of technology, you know Shar slash freedom is using we obviously.
Have a good.
Our relationship with them.
Wireless equipment suppliers as you probably know we do well.
Business with the three largest mm equipment providers, we are multiple operator.
Company for.
We're now two years since we decided that we will take our Samsung.
<unk> being our <unk> operator.
Equipment operator so.
So we do business with Ericsson, we do business with Nokia and we do business with Samsung.
We know that Sweden is a nokia customers.
Sure.
Nokia equipment related so we have the capacity to work very closely with them and we'll be able to start the <unk>.
<unk> very quickly.
Obviously this business is already ongoing.
<unk> continued through ongoing business and we will then.
Start.
<unk>.
Transition process that will bring us the cost saving in terms of systems.
<unk> and <unk>.
Purchasing power and in terms of roaming prices and so on that will bring us.
The savings that we factored in in our internal models.
Thanks for the color.
And then can you talk to us.
Asked about the impact of the acquisition of <unk> by a competitor and how we should think about the wholesale market and wholesale revenue going forward.
If you're a cable co peers have started disclosing and retail internet.
Subscribers, just curious how big a portion of that TPI eight subscribers within your base.
Yeah.
Uh huh.
Right now it's.
Certainly not completely easy.
Figuring out.
As you as we've just.
Find out.
We were negotiating with the media.
The acquisition in the meantime, but we didnt knew during that was taking place.
That was negotiating with E box Tpa that we know pretty well.
Quebec and the same thing for them.
We know that you know of.
A significant portion.
Uh huh.
The box customers were.
Related to <unk>.
Our own network and we are we have a DPI business, which is.
Well I'm not going to say huge.
But certainly we think importantly compare to other providers for.
For a simple reason.
I think that you know TPI as operators.
We're considering.
This deal at all.
Our company much easier to do business with.
A company that was providing a better service.
<unk> product.
At a better price.
Will this be you know the situation moving forward will E box customers migrate.
Well network well, we'll find out if we were to do so and we're not seeing any things like this right now.
Well they run the risk to lose their customers.
So will they continue in this room, we'll find out but.
It's too early.
Definitely right now.
The capacity to understand all the dynamics of this new phenomenon, where are you seeing incumbents buying ppas.
Fair enough. Thank you very much.
Okay.
Alright. Our next question comes from Matthew Griffiths from Bank of America. Please go ahead.
Alright, thanks for taking the question.
I just wanted to follow up first on.
Vince was asking about and tier call you were mentioning that are you comfortable that you're going to be competitive in the future, but I was wondering.
Hopes.
If you're concerned about any erosion and competitiveness in the present.
Particularly when it comes to.
Upload speeds or even just the marketing cache and perhaps of offering much faster download speeds in some cases.
And what you if you can give any timeline on how quickly if you saw that as a concern you could respond in the market.
Okay.
You are talking about wireline or wireless or wireline.
In wireline, particularly around the debate around DOCSIS.
<unk> says.
Yeah.
Which is being worked on currently but it isn't being implemented currently and so if you could just comment on if you're seeing any erosion in competitiveness versus what competitors might be offering and if that's having an impact and how quickly you can respond.
If you are seeing an impact.
Yes.
Obviously, an interesting question with which we.
Ask ourselves.
And.
We made the.
Surveys of figuring out what are the most important element.
For a customer to subscribe to a provider compared to it or another one.
And the main element.
You will not be surprised.
To find out that it is pricing.
Prices as the main driver.
In terms of service that we are offering.
We are.
Certainly on the ISP side.
400 megabytes.
That was certainly.
Pretty good brought up for which even in this.
New era and they make environment you will have a.
Strong capacity the service with a good product.
By that debt.
You're going to service your customers.
<unk>, two or three people or <unk> people are doing teams are playing on other things. So the quality of our product is just fine it deliver the service what customers are looking for and certainly in terms of prices. They will continue.
New.
The favor of that.
Again, we're well positioned if we were to move in.
We're offering one gig in certain areas.
As you can imagine offering one gig is more expensive than offering lower speed.
Because you need new equipment, you need more card Uni.
Some upload from provide us some.
Program providers.
And.
Our response.
Is similar to.
So what we're seeing.
When our competitor is offering that kind of service.
So.
To give you you know what.
I'll answer on the radar screen that we have right now there is no significant changes in terms of elements that will move one customer out of pricing consideration to speed or to new technology.
And we can refer.
To.
So what we're seeing in the wireless business that we're not seeing it only in Canada and Quebec.
We are seeing this taking place everywhere in the world.
A lot of people that have been asking our to monetize five G.
That's a pretty interesting question.
We never heard an answer of that.
<unk> will remain.
Our new technology.
Be driven by prices, if you offer <unk>, 20% higher than what you are able to offer and other services, obviously theyre going to be less successful. If you were to see prices going down.
I guess that the dynamic of the wireline and the wireless in terms of new technology introductions are similar and then therefore, we're seeing ourselves.
The right place at the right moment with the right pricing.
Alright, that's very helpful and if I could just sneak one a second question.
Just on the Capex front.
Being in a decline in Capex and I'm just curious at how sustainable the decrease is or if we've reached a bit of a.
A plateau in the decline.
Going forward and maybe if you could just outline kind of whats driving that because that you've mentioned in your prepared remarks that your investments are continuing so if that's the case, where the what are the drivers of the decrease would be helpful. Thank you.
I would like.
To emphasize on one thing which is for us very important.
And it.
We'll give you a little bit more detail.
For us it's not.
Yes.
We will continue and.
This had been a culture.
As you do it wrong.
And I would say its inception.
No.
And Mr. Sanyo passed away recently.
Mr Shao.
This company on <unk>.
Providing customers with the best.
Right.
In Nevada.
And always in front of what the market was considered.
We keep this philosophy so at maintenance for us that we will not got a cut on capital expenditure that will reduce our introduction of new technology.
So <unk> will always remain you know a significant portion of our investment.
And then for the rest we need to understand that we will prioritize because as you know in capital expenditure you have all sorts of expenses.
And then Neal information technology, Youre going to have other things, which sometimes we will not consider our priority for bringing new customers new products.
It remains for us.
All of the fleet that we will never get out of it and we will continue to emphasize on it maybe it will have a few other things to that yeah just.
On top of just add to what Jack I'll, just said and.
And just to be clear.
Sort of I'll call it a step function that.
That we've that we've lived through due to everything that <unk> said you know the the non essential.
The the number of projects of capitalized projects that.
As we are now more disciplined and more rigorous that we that we just don't do it.
And as we leaning out our our our teams you know it just naturally.
Brings down a lot of non essential.
And non growth or non technology related projects that we've just said, yes, that's a nice to have but you know what Oh. This is not going to benefit us in any point in it doesn't have a business case, that's really compelling. So we're just going to throw it on the site, but the step function.
Due to this to this to this reduction is that going to be you know be able to to be able to replicate it ever and ever and ever again.
I'm sure you can't just you know.
Once you have you have cleaned out the you know the bad that you know where the non essential leads as you know you can't say you can't keep.
Keep doing that every year and we and also last point Yeah. We were helped on the equipment front as well on the capitalization side of equipment.
Due to helix. So that's another thing that won't come back, but Ah, but you know that that you know that doesn't mean that we can't continue to up to two to be more efficient and we certainly intend to be as disciplined and rigorous going forward, but I think if that's your question.
The decrease in AR.
And Capex is not going to be you know, it's not again, it's not going to continue at that same rate.
Alright. Thank you so much I appreciate it.
Yeah.
Our next question comes from.
Debris from Vishal. Please go ahead.
No Steve I was hoping like Alabama, Larry Thanks for taking my question first question is on the V Media acquisition now it's been a few months that are that you've operated this asset now.
Were you surprised by by some of the aspects.
Market outside of Quebec.
Wholesale business, maybe maybe some some maybe behavior of consumers that would be different from from Quebec market.
Okay.
And FCA as you always like I guess, that's the.
First of all we are.
Uh huh.
We are not completely but we.
We can say that we would have been surprised about you know what the what delta is doing regarding you know they're there.
Their desire to acquire <unk>.
You know for us.
We acquired <unk>.
Certainly you know to be able to.
To get access to other regions of Canada, where there's already you know one in E box market.
So do we media give us the capacity I think interconnection gave us the capacity to position ourselves in the future.
Positively, though if we were to launch.
Wireless towards you know well when we will or acquire a freedom. So it's a value added service that we.
We are having.
So it's the logic behind this quite different than probably the one that bell had so what will be the effect moving forward right now, it's probably a door to door.
No, but certainly argue PIH.
<unk> is looking to grow and we already launched a campaign in Manitoba, obviously be media is certainly not you know like MTS.
And in Manitoba, we need to start somewhere and we will continue our four brand recognition exercise at very competitive prices and we think that will succeed coupled again with what the future will bring us in terms of additional services.
Whatever is through freedom mobile or through and D&O.
We'll offer.
I know if I answered completely your question zero, but and this is what they are now that's that's fine. Thank you Pascal and then the second one I would have is in terms of the TV platform migration, but we're seeing a helix helix platform installation deal salaries a bit.
Here there was kind of is this expectation that maybe it could be transitioning to two only one platform in the future and that could improve margins.
Thats still a target that are that you have over the foreseeable future.
I think so yes.
What we're doing just to be clear is that we have two platforms right. I mean, we have the heat we introduced helix a couple of years ago.
You know as a.
And added to value I'll call. It in a premium type of service platform.
But still have equal.
For for a lot of T V.
Users is.
As you know is doing the job. So I think what we've been doing over the past few.
Few months to ensure that.
That we maximize <unk> and margin is really the price and position. These two platforms.
And in a complementary fashion if people want and are willing to pay and are seeing because some people are looking to for the added services and the added value of helix.
At the right price then are we positioned there, but we are no longer.
Migrating against a economic sense and away from our platform equal in this case that is for many people doing his job done just fine.
So I think that's more what we're doing as opposed to I'm going to.
Our unified platform as I as I think you were you were alluding to.
At least was the introduction of IP TV for which you know it was a.
Coupled with other services within our environment. We think we can think of the Internet. We can think of voice recognition. So we found out that.
You know being a little bit too aggressive in marketing our elixir, whereas.
Probably not the complete best ways to achieve.
Our desire to improve our margins and TV distribution.
So we.
We slowdown our migration or our transition.
Marketing transition, Luke and finding out that.
What the excess and we have a solid base of customers.
<unk> are pleased with what the equal service or offering them.
This is not you know what.
Getting out of the phenomenon, which we're seeing as cord shaving and which we he's taking place on both platforms.
But certainly less expensive.
You need to deploy new equipment to move from it and you can go to a customer we thought that maybe we will be able to.
The sale of the equipment.
And again, it's a very competitive market.
Bill is there you know pushing obviously to our products.
We are facing this environment and then therefore I think that we were.
Open it up to change a little bit the way that we were marketing R&D strategy.
At the end of the day I would say that we are happy with the results because we've been able to increase our margins in television distribution, which is what we're looking for despite strong phenomenon like cord shaving that is taking place and cord cutting.
Not affecting obviously the margin, but you know certainly not a bad business for us a bit of good news for us and it shows up and the way that we're able to is to slow the decrease of our customer base that we get in the TV distribution.
Great.
Yeah.
Right.
Next question comes from Mark.
<unk> <unk> from Scotiabank. Please go ahead.
Yes. Thank you for taking my question only rule.
I wanted to maybe talk a little bit about the pricing environment in Quebec or cable.
You have <unk>.
Peter's against now for a long time successfully.
We have seen recently a surge by bell in terms of.
How they market their products.
Coming more promotional and as well offering a product with a nice technical.
Specifications in terms of speed et cetera et cetera.
So can you maybe share with us what you know because we don't see it right now in your results, it's something that's likely to you know.
B more present and future results.
Maybe just in terms of.
Promotional pressure that you've seen is it.
Forcing you to react and Oxford promotions that.
<unk> some of them are pools that we might see in the cable business growing in the next couple of quarters.
And if it's not there.
And then at.
What point would you sacrifice share to protect sure.
You had pricing.
And the second question I had is just a clarification when it comes to PPI a.
Is it.
Is it.
<unk>.
Ballpark to think that it is about 16% of your subscriber base and.
And finally my last question is on Capex.
You mentioned that.
Quantitatively.
Discuss what's driving your capex decisions made today.
Can you maybe provide any indications how.
How we should look at Capex for 2023, if you don't want to give a precise number maybe direction up or down or flat versus 2022. Thank you.
Yeah.
Oh, so about trying to.
Answering the first question.
Yes, it's a very competitive environment.
It's more competitive than anywhere else.
If you were to look of prices and it's just it's funny I mean, it was funny.
Bobby.
No.
You will see that.
That will offer a 60 bucks, we're one five gig in <unk>.
And get to know us.
And across the river in Ottawa same product was $75.
So.
It shows that.
Or is there something happening.
Are they more but we've been seeing always you know Val and other incumbents more aggressive are the incumbents, obviously in the wireless business and now in the wireline business.
Very competitive in Quebec.
This is why and Oh man.
I guess that you know.
Evidence is there to prove it.
That we need to work on cost and we've been working on cod.
As always we will continue to do so.
Spoilage is not something that we agree.
Agree or access and we will continue to work very closely on that.
And this is the way that we think that we'll be able to succeed by continuing to have.
The highest margin of the industry, despite the very challenging competitive environment.
All of them.
Or are all down Belo will continue.
The goal well, we don't know.
But there is certainly a point where they will have to think about our think twice about you know what will be the.
The future of their business, but certainly you know again, what we can say is our product and our services and we emphasized on the fact that despite the fact that I said earlier, the first and most important element.
Four.
Picking a provider.
Against the other is a pricing element customer service is also a significant one and it's known.
That customer service is certainly one of the business that we've been investing in for the last 20 years and has still continued to provide us.
A solid customer base that think twice before moving for quote unquote, a better pricing environment, because it's funny to have a better price.
You don't have a service or your product is not efficient and therefore not able to achieve.
The full capacity of adding it certainly not the best way for you to take the proper decision. So we will continue to look forward with the same philosophy good products good prices.
And operational efficiency.
And just it for you.
The other two questions on PPI as in our case, its just a little over 10% of our of the internet or to use that or.
That are represented by a tpa sun and our business.
And in terms of Capex guidance.
You know we will we're not going to give you guidance today, but I think stability is probably the word that that most the athlete.
We'll describe our as we as we're looking forward to 2023 Capex.
As we said there is still we believe that there is still some some efficiency gains to be to be had and maybe further investments on some of the big strip you know the big growth related or technology related projects. So you know it may be it may be slightly up but you know what we have in mind right.
There's more stability than then increase or decrease in terms of capex on a yearly basis.
Okay. Thank you very much.
Right.
Next question comes from David Mcfadden from core Mark Securities. Please go ahead.
Oh, yeah. Thanks for squeezing me in.
A couple of questions, obviously lots of calls or questions on the call today.
Can you just comment on the media does it have.
Internet retailer agreements in BC, and Alberta, and all of the major urban centers in those two provinces.
Yes, it does.
Is it operating at it operates across Canada. It operates in all provinces.
Is that what you are asking David.
I just wanted to know like SME and by freedom.
And then you'd be able to step into those agreements pretty quickly and offer a bundled product right correct.
Okay.
And then just on that note do you, possibly say.
Talents could.
Try and have.
Have a reseller agreement with you and all for a bundle in your home territory.
Tom.
Everything is possible David.
[laughter].
For Dallas, but I guess that you know.
It is certainly something that this should you should study or they should look at but then.
Yeah, Yeah, I mean, I mean, maybe maybe bound by.
And Oh, my Gosh you everyone.
Tom I don't know I don't know what your thoughts on that.
Okay.
Yeah.
Our thoughts on Bell bind the DPA is is that what you're asking.
To prevent us from doing so.
And so we're not quite sure and I think as Hal mentioned, a little bit earlier, we're not you know.
We're not in the hands of obviously of the of our musical Vivek, but.
You know what that that at this point I think our I think we've been successful with our with Phys and with.
Our current strategy and building market share and.
And hitting all the various price points that seem to be connecting with the.
With our with our subscribers and with our market. So.
I don't know were not seeing I don't think I mentioned it a bit earlier you know we're not seeing at this point any any major impact from from sleep, It dead or from E box or for many of these these ppas.
Having being acquired.
So anyway that's.
Let's see.
In our cases as we've just mentioned the case of the media is more and as more for us to do with our bundling strategy going outside of Quebec.
Then it has with them.
With playing on prices, which we believe we can achieve on our own.
Yeah Yeah.
Okay, and then one.
Last one I mean have you given a sort of a range for Capex for 2022 did you give an update on <unk> no no no. We havent no as I said you know if you know basically what we're all end up this year is probably going to be what you were going to be shooting for next year.
Okay.
Alright, thank you.
Thank you David.
Alright, and the last question comes from Tim Casey from BMO. Please go ahead Tim.
Thanks Carl.
I mean, I think one of the influences in your negotiated deal with Rogers that you would have a roaming arrangement there largely worked out.
No I appreciate that.
A different discussion if you didn't have freedom, but should we not assume that.
Youre going to be able to get to an agreement on an expedited basis, even though given your comments about guest efforts in arbitration given the discussions you've already had with Rogers is that not a fair assumption.
Well, Tim I would say yeah, I know you you're not wrong, we would certainly you know.
Favre.
That type of situation as we know as you know we have a lot on our desk right now.
Moving forward with the.
Next week.
We need to document now our agreement.
What of.
The consideration was also.
Uh huh.
The issue we had on joined.
Network. So we're working very hard to make sure that we're gonna be.
In the best position.
To convince the course that everything's okay.
And were full blown open for making sure competition will take place in the wireless as quickly as possible. So is robbing parts of it.
I guess as you.
We cannot thing that is not part of a larger agreement because roaming and as you know is of importance or any type of operators.
Got it thank you.
Thank you Tim.
I think if we do not.
Questions on my own.
No no no further questions in the queue at this time.
Okay.
And talk to you.
The next conference call in a quarter from now thank you and have a nice day.
Yeah.
Ladies and gentlemen, this concludes the camera core Inc. 's financial results for the 'twenty 'twenty to Q3 conference call. Thank you for your participation and have a nice day.
Okay.