Q4 2022 Quebecor Inc Earnings Call
[music].
The conference is now being recorded.
[noise] good morning every.
Thank you for standing by and welcome to the cubic core Inc's financial results for the 2022 fourth quarter and full year conference call.
I'd like to introduce your Seamark Chief Financial Officer of kept a core Inc. Please go ahead.
Yes, good morning, everyone and welcome to the Quebec, Our conference call.
Joining me to discuss our financial and operating results for the fourth quarter of 2022 and also the full year of 2022 of course is telling me that the president and Chief Executive Officer, and unable to attend the conference call will be able to listen to our reporting by telephone or webcast access details are available.
Until that quarters website at Triple W. Dot tobacco dotcom, the recording will be available until April the 25th of this year I also want to as usual to inform you that certain statements made on the call today may be considered forward looking and we would refer you to the risk factors outlined in today's press release and reports filed.
Lots of cooperation with regulatory authorities, let me now turn the floor to checkout.
Yes.
And.
Everyone.
So I would like to start by.
Great training our strong commitment.
To get into a freedom bolt on acquisition done.
As soon as I said in Canada the industry departments.
Please.
Its review and give us the authorization to proceed.
Our plans are drawn.
And we are ready to go ready to create real lasting competitive dynamics in Ontario, and Western Canada.
The benefits of technological innovation and investment.
Superior client experience.
<unk> commercial strategy.
Lower prices the Canadians as we have done here.
<unk> for more than 12 years.
This transaction represents.
A springboard.
To a new era of goal for Quebec or recognizing.
Recognizing that after an impressive run in telecom and wireless growth since our acquisition of <unk>.
Do you do it all in 2000.
We are now reaching a natural point in the cycle of slowing penetration of a more mature market.
We are also continuing our efforts to.
Reach all sale M D N O access agreement with Bell and Telus, but I have to be honest.
Alright, negotiate then are difficult to say the lease.
Little progress.
Nearly two years.
Following the CRD decision mandating <unk>, despite our good faith attempts.
That being said.
We're not surprised by this situation.
I think bought bell and Telus delaying tactics on many fronts over the years.
With new leadership at the C or D C O rather.
We expect.
A quick resolution.
In line with the repeated public statements from the minister of industry, where I've been very clear that he wants and intend to achieve real competition in the telecom market in Canada.
On a related note and as a further proof of our commitment and belief in facility based competition.
You recently made.
The other investments or acquired spectrum with 600 megahertz band in Manitoba, and 3500 megahertz band in Quebec, which will further enhance our five G deployment.
On the regulatory front.
I feel compelled to repeat that we need the swift adoption of Bill C 18, deregulate negotiation between web giant.
News outlets.
Simply.
As we all know.
Has that been repeated.
Now.
These web platforms use that content reduced by Canadian news organization to generate a significant portion of their interaction on their networks and should be required to pay for a fair price for it there is.
Moreover.
Notwithstanding the adoptions of <unk> 11.
The Ci D C needs to lessen the regulatory burden.
Good News company, which are operating in a increasingly precarious environment or quite frankly <unk>.
Linzess stay afloat and soon if nothing is done.
<unk>.
Local news and indeed, all news, which is vital to a strong and healthy democracy.
Is suffering from the economic and final the weakening of the TV industry and our local production.
It was survival down the road.
At stake and I and again I repeat that there are regulatory and financial burden on broadcasting company is no longer sustainable.
Need to need the same regulatory and commercial freedom.
Boring web Giants.
Taking out the difficult broadcasting environment, we communicated deviate DVR group fourth quarter results last week, which continue to be impacted by the well established downward trend.
Television audiences due in part to multinational subscription video on demand services, such as Netflix Amazon Prime Disney plus another combined with unfair and this loyal competition from <unk>.
No.
Or which is engaging and are raising rates that is not within its mandate and is taking a large share of advertising revenues over and above the fees in charge for subscription in Chargers subscription I repeat to streaming served.
With two point television extra.
Therefore, other mining even more media outlets there is sustainability in our television industry ecosystem.
A compelling example of how all that kind of be the accountability has been a lot for the <unk> to Canada.
Advertising is forbidden in the over the year radio, but allow and alive and kicking on Internet radio.
It just doesn't make any sense.
And we can offer an offer many other examples of them going off mandate to this public media.
Again.
As we as said many times.
All levels of government must act before it is too late.
No other industry faced Scott faces.
Competitors that have no accountability.
<unk> needs to address unfairly.
Unfair behavior, and scooping up advertising dollars, which are conventional network only source of revenue.
Whereas the public broadcaster is deadly government subsidized.
This creates.
Blatantly uneven playing field for private broadcasters.
In addition.
There is the IV unfair treatment of all our specialty channel by.
The distributor the LTV.
Unlike all other broadcasting distribution undertaking in Quebec.
TV continues to pay fees below the market value of our channels.
Continuing to favor, it's all channels, creating a permanent conflict of interest between its role as a broadcaster and a distributor of channels, which are competing channels.
Faced with these circumstances and the lack of regulatory and government intervention.
Which had been long.
Evident in which we have repeatedly raised with public authorities, we work force.
To take difficult.
But necessary measures.
So we reduced our operating expenses.
All of our media segment.
All thing Unfortunately.
The reduction of our workforce.
In order to restore our financial position and ensure.
Our sustainability.
Notwithstanding these challenging circumstances.
The market conditions.
Our continued investment in content.
Strengthen our fall schedule and protected our market share of both CVR network and our specialty channel.
Which grew their combined market share by one five percentage point.
243%.
Our major entertainment shows and our original series.
Can you delete a rating with shows such as chopped up a mask.
It was an.
And our daily program Andy following draw.
Drawing more than 1 million viewers.
Okay.
On a consolidated basis.
I am proud to report that <unk> generated more than 144 billion in cash flow from operation.
In 2022.
An increase of 4% over 2021.
Our improving cash flow from operation by 9% and its EBITDA by 2% over the year.
While maintaining by far the best margin in the industry.
I believe.
That this API is.
It is by far.
The most important and compelling benchmark other companies group performance.
Compare.
It's competitive.
Turning to the telecom sector as you know.
Opposition was very intense during the fourth quarter.
Both wireline and wireless.
I think what will be in a promoter and main contributor to competition and promotional intensity, we dealt with this intense period wisely and with discipline.
Managing to find the optimal balance between short term growth and long term profitability.
As demonstrated by our increase in our booth for all our products.
Softer yeah, more profitable wireless <unk> growth as well as significantly reduced customer declined.
Traditional services, allowing us to return to growth in our wireline services gross margin.
As we all know.
What kind of prices in Quebec are significantly lower than those charge by the incumbents to all other Canadian.
Now that is probably the most striking example, with its 515 gig package offered two weeks ago 60 Bucks.
Recently at $65 ear in Quebec.
$80 in the maritime.
$115 in Ontario, and Toronto, and believe it or not do $135 and one event.
On a more contemporary note.
We have to point out that this approach.
He is quite the opposite.
But as our competitors.
Quite simply by their customers during the highly promotional black Friday period ear in Quebec as demonstrated by our wireless EBITDA growth being triple or more that of our competitors.
On that specific number.
We're we were successfully and mitigating PV declines lowing churn rates and maximizing our pool by better positioning our brand and optimizing the pricing of our eligible and Alex.
In a market characterized by ongoing card shaving and cord cutting we manage the slowdown in this trend in both TV and wireline telephony for our fourth consecutive quarter.
For the year, we reduced the rates out of TV subscriber declines by more than 28% and wireline telephony subscribers by nearly 25%.
All being in a much improved wireline service gross margin.
And our first quarterly growth over the last year and a half.
And internet access the year over a year ago.
Sixth Street 3000, new Internet subscribers.
Which include the acquisition of 37000 V media customers and four quarter net add of 1000 RG use.
Internet article.
<unk> increased by $1 20.
Our two 2% over the same quarter last year and by 32 said <unk>.
Sequentially again, the result of pricing optimization, and better brand positioning, allowing us to overcome the dilutive effect of bid and lower client mix.
In the wireless segment.
We recorded 13000 net adds during the quarter, which bring the last 12 months grow to 100 and over 9000 new aligned.
And our total lines to more than $1 7 million as of December 31st.
Once again.
For the fourth.
<unk> sorry consecutive quarter.
We captured the largest combined share of gross adds in Quebec with 29% for four hours to brands.
We do a ton with combined according to IDC survey.
Consolidated wireless <unk> for the quarter improved by 11% or 3% over the same quarter last year.
This increase is explained by higher planned mix, especially for FID.
Our discount and ire roaming and data usage revenues offsetting the diminishing dilutive effect of <unk> from a consolidated consolidated standpoint.
Furthermore, our wireless EBITDA increased by 22% in the quarter and 18% year over year, our best performance in the last two years and almost triple that of our closest competitor.
Clearly.
Relentless relentlessly continued to build market share and to successfully navigate an ever increasing promotional and competitive environment.
Due to the strength and complain comment complementarity of our brands as well as our discipline.
Everyday low price approach. This is dively confirming video at home as the leader in wireless services in Quebec.
OTT video subscribers increased by 35000 this quarter four.
The first the French language video subscription platform dedicated to exclusive unscripted lifestyle documentary and entertainment content.
Since its launch in August 2021, we recorded all those 130000 subscribers.
We were pleased to go do a the continued deployment by our project of that.
Speed this quarter despite.
Despite the well known challenging context of this project, we now at 41% of the total kilometers completed our best progress since the beginning of this project.
We will keep the rhythm and expect to see a significant increase in connected one.
In the next few months and four or five gene deployment, we intensified our investment putting us slightly ahead of our annual targets in terms of operational sites deployed.
Turning to our financial results.
Telecom segment finished the year with $1 5 billion in cash flow from operation.
Our solid 9% increase compared to last year.
Our cash flow from operation margin stood at 39, 2%.
Improving three 4%.
Compared to the 35, 8% of last year.
EBITDA growth was 2% and EBITDA margin improved by one 2% to 51, 5%.
Cash flow from operation for.
For the first.
Sorry for the fourth quarter reach.
$360 million.
An increase of 5% over the same quarter last year with EBITDA growing 2% and EBITDA margin improving by 7% to 49, 6%.
Annual revenues reached $3 7 billion.
4% decrease compared to 2021.
<unk> slightly increased by <unk>, 7% in the fourth quarter as compared to last year, mostly due to higher volume.
Wireless and Internet services revenues and wireless equipment sales, partially offset by lower equipment sales, resulting from our slower earnings growth as we optimize our two brands pricing to improve margins.
Our cost reduction and if it is are paying off with full year operating expenses down by 5%.
Inflating and do an ever increasing industry, leading EBITDA margin of 51.
5%.
Telecom Capex spending without was down $80 million for the full year as compared to last year.
Continue to focus on our strategic priorities as we operate more efficiently by continuing to lower our cost structure, while increasing our investment level on key initiatives.
Such as LTE advance.
<unk> G.
And network extensions, which explain the 8 million increase in the quarter.
Core Capex investments are.
Our satellite thing as we complete a full cycle of more efficient spend.
I will now let you review our financial results.
Mr <unk>.
Consolidated basis for the fourth quarter, <unk> revenues reached $1 $109 billion up.
<unk>, 1% from last year revenues from our Telecom segment was up <unk>, 7% to $960 million, mainly due to the increase for mobile services equipment and Internet access.
Revenues from the media segment increased one 4% to $215 million in the fourth quarter, while our sports and entertainment segment grew one 7% to $54 million in the quarter. Our adjusted cash flows from operations decreased by $11 million for the quarter or 3% to $359 million.
Mainly due to an EBITDA decrease.
And adjusted cash flows from operations from our Telecom segment grew $2 million or <unk>, 5% to $360 million.
Go backwards EBITDA was down 3% to $483 million in the quarter, mainly due to the $14 million decrease in EBITDA from our media segment, which is explained by increased spending on content at the TV network and on TV sports.
Communications segment, so Didier all posted EBITDA up $9 million or 2% to $406 $76 million.
<unk> reported a net income attributable to shareholders of $143 million in the quarter or <unk> 62 per share compared to a net income of $161 million or <unk> 67 per share reported in the same quarter last year <unk>.
Adjusted income from continuing operations, excluding unusual items and gains or losses on valuation of financial instruments came in at $159 million or <unk> 69 per share compared to an adjusted income of $158 million or <unk> 66 per share in the same quarter last year.
For the full year, Quebec quarters revenues were down 5% to $4 $53 billion.
And EBITDA was down 2% to $1 $93 billion.
EBITDA from our Telecom segment grew 2% to $1 $91 billion for the same period, an improvement of $37 million over last year.
As of the end of the quarter, our net debt to EBITDA ratio was 320 times compared to one to 319 times. So.
So fairly stable reported as of the end of the fourth quarter last year.
Our balance sheet remains very strong with available liquidity of over $1 $7 billion at the end of the fourth quarter pro forma the redemption at maturity of Quebec, where media is five and three quarter percent senior notes on January 15th and the increase of videotron unsecured revolving credit facility from one five to two <unk>.
In January of this year, our available liquidity of $1 4 million are still more than sufficient to fulfill our commitments and to fuel our development plans.
In anticipation of the acquisition of Freedom mobile video trying to have secured financing commitments from a syndicate of financial institutions for a new secured term credit facility of up to 240 or $1 billion.
Emprise of three tranches maturing over four years.
During the full year, we purchased and canceled $8 3 million class B shares for a total investment of $237 million.
And finally, the board has declared yesterday, a quarterly dividend of <unk> 30 per class, a and B shares which represents a payout of 34% of our free cash flows in line with our targets that we had communicated some sometime ago of staying between 30 and 50%.
We thank you for your attention and we'll now open the lines to answer your questions.
Of course, and just as a reminder to ask a question.
Star one.
And we'll start with the first question we have in the queue.
It comes from Maher Yaghi from Scotia Bank. Please.
Go ahead Mark.
We know people who are born Johnny.
I'd like just maybe I have two questions for you. The first one is on.
Yeah Gal mentioned in his prepared remarks regarding the competitive dynamic internet in Quebec.
Versus Ontario, and a second question on the deal with Shaw and Rogers.
So first yes.
When you you know you were discussing about the competitive dynamic and in Quebec versus Ontario.
You know when when we saw yesterday your filing.
On the tech savvy parts on applications, where the obstetrics deals you've mentioned in that filing.
Pricing dynamic in Quebec, which has very aggressive by BCE.
And this morning.
If you look at the pricing, it's practically half the price and Quebec versus Ontario.
And.
They're offering internet at double the speed that videotron is offering a lower price than you guys have in the marketplace. How long can you sustain that kind of pressure on price before because so far you have not a competing aggressively on price.
<unk> accepted some some market share losses, but can you continue long term and not be.
Aggressive on price and accept too much to lose market share to BCE and a second question on on the deal with Rogers.
Are you still satisfied with the deal that you struck with Rogers and are you still confident.
But you'll have assembled the right elements through the deal to perform better than what we saw.
Shop perform on wireless thank you.
Good thank.
Thank you.
First of all.
I cannot give you too many.
Things.
The competitive environment other than.
Everyone knows which are and I guess that you weren't on the bell side and find out what the different prices are and throughout Canada.
We entered it.
I'm not saying that you know a one five gig is paramount.
Paramount.
For any type of.
Of our service.
We've been in this business for very long time, and I think that you know we did.
And we offer a great proposal and good deals to our customers I think that we have.
Significant amount of loyal customers that will depreciate certainly.
Prices.
But you need also to incorporate all of this within a kind of a bundle perspective.
But certainly also of great importance and this has been.
Well known for the last 20 years, and it's still something that bill is not able to do.
The deal appropriately.
And in fact, we're focusing all our our advertising on this it is customer service.
Not everyone is digital safety and our customers are loyal are.
I appreciate you know the way that we're supporting them.
And if there is anything that could happen and we're going to be there.
We are the one that will help our customers and this carry.
While we consider.
A significant value certainly its an intangible value.
It's certainly a value and we intend to continue.
It's a physician or customer service.
Of importance.
The second thing, which is a important also and.
Yes.
Sure.
So the five.
Are the FTE th rates.
Our regulated as the coax prices are regulated to deepen the DPI.
We have been servicing DPI for a very long time.
Quebec in fact, most CPI.
Either you know today obviously.
From E box, which was bought by Val <unk>.
I have been using.
<unk> as our network network providers why because the prices was more interesting and it was also regulated at a much slower level than the one that was regulated by the CRT D C for the FTC.
Th in fact, the price regulated for FTE H is $128. So as you are deep TIAA and you want to.
Come on Bell network.
This is the price that you would need to pay.
Wow Val.
Is selling.
The same access.
At $60 two weeks ago and 65.
I think the increased our price of about.
Less than a week ago, roughly a week.
So is this sustainable I guess, it's not sustainable on the other side of the equation, we hope that the CRT D, which is reviewing the dth and which was.
They established a price on the th.
Turning to Bell.
Well the arguments.
That was their cost.
To deliver.
S Dth customers.
So according to this logic.
Each time.
That bell is selling.
<unk> hundred 60 Bucks.
They're losing $68.
Which is obviously doesn't make sense and for which the CIBC will be in a very good position.
To continue to do things that doesn't make sense. So we.
We are in a hurry to use RV media products.
To be able to use S eth at decent price.
In other territories, which are actually being serviced by <unk>.
And I think obviously of importance given the size of the market the Toronto market.
And other big markets.
So that goes for the for the first question.
The second one.
All the time that I've been.
Take in mind.
The different circumstances that this transaction met.
Conversation Roger as AD with the competition Bureau, I guess, we will not allow or we didn't know you know what were those discussions soon.
The tribunal.
At the federal level at the first level that the federal court.
And the second level at the appeal in the Federal Court.
And then.
With the broader rollout iPad.
All this time.
We're used to.
Make sure that we will be able to have.
What we consider the proper tools to compete.
<unk>.
And profitably.
So I would say that at this stage, we're just waiting for the minister to accrue.
And we believe.
Very strongly.
And we've been able to met.
What I said earlier in my conference call, which is what the minister is looking for.
Which are a real competitive environment lower pricing.
And we think that we have.
I'm not going to say weapons, but certainly tools to be able.
To get there.
So we're expecting the year approval and as I mentioned, we're ready to go.
And we look forward to be able also to include the NDA to close the Amgen agreement.
Bell I'd tell us and transform CIBC to cover the last element required for an optimized platform.
Thank you Pascal.
Yeah.
Alright, our next question comes from Stephanie price from CIBC.
Please go ahead Stephanie.
Good morning. Thank you you mentioned in your prepared remarks for the fourth quarter I saw some aggressive promotional intensity in wireless as well.
Walk us through the current promotional environment, there and how we should think about the mix of videotron virtually.
And maybe talk a little bit of a wireless churn as well.
Stephanie.
Well last year.
Your question yes.
Yes, so the wireless was as we stated that the wireless competitive environment remained but theres nothing necessarily new about this and always has been on the wireless side anyway, because I think that's your question if not we can certainly talk about wireline, but definitely if you're more specifically asking about <unk>.
Wireless yes, that's it.
Nothing and not necessarily a general increase in competitive or promotional intensity other than the seasonal.
Improvement or increase.
That is that as usual every year and in Q4.
Over the Black Friday period, et cetera et cetera.
But.
Certainly on that friends all.
All the competitors with their numerous brands now have.
Certainly continue to be.
To be competitive, but no I wouldn't say that no not any not materially higher than in previous years and previous in previous quarters.
Youre asking about churn.
Churn in wireless was indeed, a little bit up.
Certainly as it usually is again there is a seasonal.
Variation that you know of and in Q4.
But other than that.
It certainly is.
Beyond that it certainly is a is an area where we are focusing.
As you well know it's.
It's a lot more efficient to retain.
We're retaining the customer than to have to win them back or when her back.
But I think the good news in all of this is that when I look at churn.
For for wireless in Q1, so far it's things are back to normal.
If you let in its intended then maybe I'll make a few remarks as we're talking about this on the wireline side.
Wireline churn was stable actually so yes, we referred in the Cal answered very detailed.
You gave a very detailed response to the <unk> question on the wireline side.
And Bell's competitive stance, which has increased its true, but I think it's important to remind you that R. R.
And our churn is stable and that as Stefan mentioned, we're fine we're not only fighting on price you know we're fighting on a number of fronts.
And and I think we've been we've been rather successful in fighting off Bell and I certainly wouldn't describe it to the.
So I think the buses that were losing market share to build them.
I think there are there obviously.
Tuesday froze on this.
As in any competitive environment, but.
At this point I think where we're on the winning side and and and again, let me remind you that you know at the end of the day, our objective is margin and as profitability and I think we've been successful I think our margin in wireline.
Is is is improving and we had been honest with you guys I think in the doctor over the past few quarters, where we had said you know we werent optimal and how were positioning our products and you know when we were selling helix, perhaps as you know are not not at the right price.
Compared to with.
It's premium status.
Compared to equal or our other internet product.
And television distribution of course, and now I think we've finally managed to do.
To crack that nut then.
As demonstrated by our wireline margin debt.
That has finally.
Coming back online and increasing so I think at the end of the day I think we've made the right decisions in that competitive environment.
Come on as we've said is that.
Scott said in his speech this is something we.
The competitive environment in Quebec, I mean, we almost created it so we're certainly comfortable in dealing with it and I think we're showing by our improved profitability.
That you.
You know that we're successful in this.
Sometimes we're asking ourselves at the end of the day you know our competitors are we'd like to show.
<unk> increased but look.
Look at the numbers and I guess that all those ads.
Our <unk>.
Certainly not.
Being converted.
Additionally.
EBITDA or improve margin to the opposite.
Alright, that's helpful color. Thank you.
Touch on Capex as well, so videotron 2020, capex decreased substantially year over year, just curious how we should think about the runway run rate capex in Quebec.
And if we should think about.
Any additional investments in <unk> and DOCSIS four prop here.
Yeah, so our capex over the year as we mentioned we're down $80 million.
<unk>.
The run rate.
Well, one way to look at it and I think youll see it from the our Q4, Capex, which are creep back up a little bit as we increased our investments a little bit in LTE and <unk> and in network extensions.
All in all end at 450 ish million for telecom.
And as I as we said last time and we're you know we're holding through on that.
We see it as stable going forward for 2023.
At this point.
We're comfortable that we've that we've managed to be a to.
To be more disciplined and to be to be more efficient in our investments.
We've.
Don't forget that Capex is also the reduction in Capex is also very directly linked to our various operating expense reductions you know as a lot of our teams as I'm sure you understand you know whether it's there are the obvious ones like engineering, and <unk> and all of it but even some marketing and some other teams are also capitalized when we.
You know when we undertake projects.
So.
We've just been a lot more disciplined as to what do we invest in and how much we invest in each of these projects. Then you know what it is.
I think it's a it's turning out.
Very nicely and we're able to show.
Very very good improvements in cash at the end of the day as checkout said, that's the that's the important whether it's capitalized or not capitalized.
At the end of the day the money is coming out of the doors. So this is what we've we've been successful in installing.
And slowing down.
How much money you have to pay to reduce your debt and to whatever we repurchase share if you want to repurchase shares and pay dividends and <unk>.
You're reducing your leverage.
The most important thing obviously without.
Being.
<unk>.
Not at the proper level in terms of technology offered to your customers and this is we will always got idea of focus.
Providing the best customer service, but also on top of that.
Products that fifth.
Customers' requirements.
And I think you mentioned sorry, just to add I think you had mentioned DOCSIS four <unk> Stephanie is that right, yes, yes.
So we're obviously on it.
And we've been working.
With the with.
Others in cable labs, and then in others I know, we're certainly on top of that of that new initiatives.
It's a bit early for us to be able to comment more.
I think more specifically, but it's certainly looking.
Very interesting as they are as they as a as the next steps are allowing coax to be to be even more.
Performing so well, but we're certainly we're certainly on it is just it's a bit early I believe I don't think it would make sense for us to to make any specific comments other than we are certainly working with our peers.
This on this.
That looks very promising at this point.
Thank you very much.
Next question comes from Matthew Griffiths from Bank of America.
Please go ahead Matthew.
Thanks for taking the question. So just following up on the Capex question.
A different element maybe.
In the MD&A you reference a review of your strategic priorities I was just wondering if you could touch on what was reviewed and with the outcome of that was and what we should think of as your strategic priorities.
Going forward after reviewing them.
And then just on wireless you've done a good job obviously growing your sub base you know taking advantage of the cable base that you had in introducing his which is.
All digital.
I'm wondering if maybe the next step to keep growth going might be to.
Focus on increasing your retail distribution is that something you would consider or is that something you maybe see ads, where the competitors might have an advantage or maybe not just if you could give me your thoughts that would be interesting. Thanks.
Okay Matthew.
Well you know on the Capex side.
I mean.
We will continue to spend on them.
Our wireless network, LTE advance and <unk> and our.
Our footprint is getting bigger every day every week every month.
So.
No.
Despite the fact that you know and I was always a question is should we be able.
I guess, it's not a question anymore, but the question was right many times before or we got to be able to monetize five G to me if <unk> does Exxon <unk>, which was there for the next with <unk> and we've been seeing through the years Cigna.
Significant price reductions.
Wireless is going lower and it will continue to do so.
And I guess that would be the introduction of Quebec, all are with the freedom will help this trend.
Even more in place on the cable side other than that the DOCSIS, which is as you know and the industrial is an issue.
Our all our colleagues.
And the industry.
Digital television.
We're very well positioned and we made our investment.
And we change certainly in all of our commercial strategy regarding Alex.
Maybe at the beginning we were considering you know too much oxidizing, we change our trend so and I mentioned in my call in My conference call. My speech here, we have a balance.
<unk> platforms, which fits very well with different kind.
The customers we have.
One of a little bit more.
Money that we're spending.
Is in the network extensions, we're certainly not there.
In Toronto, where we've been this week again you know.
When you use when we're seeing what I see.
Yeah.
On the Gardiner Expressway, how many buildings were built in the last 15 years.
It was crazy domain.
Where I used to go with it on King Street.
Media building.
And that changed dramatically.
For that because in Montreal, we have a lot of construction do no not much on as in Toronto, but this is why with our in network expansion has been increasing we just don't want to Miss any new construction or a new outsole that will be available for our services.
To be offered to the next.
And evidence or our customer there. So we've been seeing and this is probably going to continue despite the fact that obviously construction slowdown a little bit because of the economy.
But we see this as an important factor.
And the loss of spending elements, which opportunity, we didnt really referred to.
Maybe you could give a little bit more detail.
It's trying to make sure that you know we will continue to have a very.
Efficient and respected.
Billing system, one of our strength was to have one bill for all our services cable Internet and.
Wireline telephony.
When we introduce wireless we were not able to do so as efficiently as we were previously and.
And we need to invest to get.
Out of our legacy system, which was built 40 years ago, and we're migrating bit by bit and especially the wireless or the different segments of wireless through this new platform and we look obviously forward to get significant saving.
One platform that we will get rid of when the new platform will be entirely efficient. So we look forward to get this exercise done and you can imagine it is of importance and it's expensive. So we're spending money.
There, but we think that we're well positioned with one partner, which ward.
Remotely.
From Canada, and I think a very competitive platform for doing so.
But do you have any other retail I think <unk> question on retail and I don't know if you want to add.
Can answer this.
With pleasure.
I think that historically, we've been using.
All of our retail platforms, while all of the commercial platforms available.
Obviously, our cable business with pushing us very strongly.
And the call centers, we have been adding people.
Boeing selling door to door, we have been also strongly involved and retail.
30 years ago, Mr. Sean your large your spectrum to do with the whole thing.
There's still a call retail platform was there for a long time.
Think that we have been.
We've been migrating because.
Can you imagine there were they were selling video rental.
So it was a previous blockbuster.
And we migrate them as commercial platform for selling wireless and others do with all services and we've been doing it very efficiently.
And as you know that's a franchise platform. We owned 50 50, 50% corporate 50 franchise and our franchisees and in fact, we have this big party two weeks ago well once a year you know we're altogether people comes from from <unk> me from Behemoth ski from.
<unk> booked all in Jive and elsewhere and we continue to focus on this platform which is.
And you know we need to compare the cost of those different platforms and they're not equal to each other but each although platforms.
One is on mission and this is why we will continue to use all of the platform as efficiently as possible and we look forward to get this.
We've been successful in doing it as a.
Another.
Very favorable positioning of our products and our sales force.
Perfect. Thanks, I actually remember, having a super clear video through a card in my wallets growing up so it's funny.
Yes.
If I could follow up just one quick question you were talking about the billing system and we've seen other operators when they touch their billing system and touching clients and <unk>.
<unk> generates.
A decision point on the size of the customer, which often results in lower net adds you address churn being stable, but I just wanted to double check that is the billing system activity Youre doing.
Impacting the net add performance at all.
This quarter and maybe for some quarters to come as you work through it.
Well you know obviously this is not completely scientific but we.
We consider not being.
Any effect on our churn the churn is related to very intense when the intensity of competition the black Friday that we.
We met and again as you know.
We decided that we don't want to play in.
In this game and then therefore continue to be disciplined on top of which obviously again, it's a mature market. So okay alright. Thank you so much.
Reducing it bit by bit and we cannot say that we we have a new wireless billing system.
Use the old one and we're looking to migrate on the new platform, which is actually on <unk>.
<unk>.
That's one.
Okay. Thank you so much.
Okay.
Next question.
Yes next question comes from.
Debris from visit.
Please go ahead Jerome.
We must see one's willing to moan. The thanks for taking my question. The first one is on is on freedom.
I Wonder if you can talk a bit about the synergies you are seeing with the wood.
With the rest of your business I know, maybe not a ton of overlap but.
Can discuss maybe in qualitative terms.
What youre seeing in terms of.
Synergies that's the first question and then the second one would be on the resellers.
A lot of M&A activity. There recently I know the last mile connections change might not be easy to switch for the buyers, but should we expect any change in terms of the financial contributions to resellers or are making that we could see in your results going forward. Thank you.
With pleasure to at all.
On the first question in hockey, though what I just.
I forgot one portion of my answer about the Matthews.
Earlier question.
And what can we bring to free them or what we will bring them.
So.
Another important segment that we've been using Forbes do at home is even more true for it because it's a complete digital platform, but the e-commerce side.
Commercial and distribution platform.
In strongly use for the last few years.
And this is certainly something that.
We think we will bring.
To freedom.
Opening they're selling vehicles, you probably know if not I guess that this is probably not a rocket science secret I would say.
Most of.
The freedom.
Assets and services.
Our souls.
Through retail.
Or from retail we will continue to do so because this is a very performing.
Vehicle.
But there are certainly not reaching every one.
And we look forward to be able to enlarge our capacity to reach customers and then therefore, using what we've been using and to do it all and again with great success.
Other than that which is obviously a creative artist to get imagine you know, we're looking forward to to increase our <unk> and our increased the numbers of our customers I would say, it's a regular type of acquisition.
Oh and procurement.
Capacity to negotiate better pricing on SaaS.
Having better promotion.
Licenses.
Adding all those things together.
And cost conscious management.
Yes that yes.
Again these are our recipes.
Sure great possibility.
And as you can imagine it also being bigger give us.
More scale to negotiate.
Better roaming charges are robbing cos and we look forward to get this done.
As quickly as possible that will improve our capacity to propose services are offers that will even better customers requirement.
So we're really bullish.
We hope this transaction will close.
As soon as possible for Canadians to enjoy.
A much better environment.
<unk> been forced to suffer.
So long.
Yeah.
As to your second question Jay home under resellers, while as you know.
Bell and and some of the others as well as recently as last week have been they have been quite active in acquiring these these resellers. So obviously it's.
There aren't that many left.
To compete against but.
A couple of points on this.
Prior to launching fifth some years ago, we had certainly looked at that.
The opportunity to acquire and <unk>.
<unk> concluded and I think it was the right. The right conclusion that that we would be able to win these customers with with FIS, which we actually did you know when we gave them a run for their money and we actually did better than that than a lot of these resellers that ended up being bought by our competitors that in F. <unk>.
If you allow me at very high prices.
And they stayed a lot a lot of money for these for these resellers. So I I still would think that.
That are that are.
That our decision to our strategy was that was the right one.
So going forward.
I think to answer your question if that was your question, but you tell me if I'm answering the wrong question, but if you know as to our performance I think you know.
We still have all the tools to continue to compete with them.
Even though the environment might evolve that's true.
Pricing environment, the regulatory environment might evolve over the next years on this but I think we're very well positioned.
Yes.
As seasonal.
Yeah.
Perfect. Our next question comes from the gut up its give from kind of court Securities. Please go ahead.
Thanks for taking my question two questions two from me.
With respect to the broadband net adds year over year.
And if you can talk a little bit about what component of that was sort of wholesale.
No that those are lower margin.
Excellent.
I was wondering if you can talk about that and then secondly.
So on the interest expense.
I'm wondering if you can give us some color on what you expect going into 'twenty three.
Know that.
One of the.
<unk> seen them, but one of the senior notes of $1 billion maturity in January .
Any color around any kind of uptick in interest expenses.
It would be helpful and connected to that with respect to full Dorian.
Have you disclosed what the terms are in terms of the rates.
Exploding et cetera.
Thank you.
Okay.
On the broadband adds.
Arab Linda yes.
A lot of the.
The variation I'll put it that way over the past few quarters has to do with the wholesale and the the generally need to be made that maybe I'll put it that way the wholesale and b to b side of it whereas on the on.
On the residential if I can call it that or on the on the individual side of the business it's been a lot.
Lot more a lot more stable and we were I was referring to the to the churn earlier on being.
Being quite stable in our market share in Haynesville and some of the others in broadband being quite being quite stable as well. So yes, I think if that was your question, yes, I believe that on the on the broadband adds a lot of the variation in the.
The decrease in our net ads and our growth has to do with the wholesale and the commercial side of things.
Yeah.
Interest rates are.
Yes on the.
Interest expense.
We are.
Boeing.
Our interest expense. It certainly is as you saw from the numbers.
It has come down as we retired over the years, some some higher coupons and replaced it with a variable or floating debt at a much slower and even even through the various hikes and in rates.
At this point that we are still retiring debt of course.
Don't forget that we used to.
To finance ourselves and then in the 10 years, usually we have been over the years financing ourselves and 10 year increments.
So we're retiring debt that was at a much higher coupon than what we're paying today even in floating now as obviously is where we've.
We've always believed in.
And the right balance and that has the one I'm not saying that high yield is no longer.
Of interest to us on the contrary, it's just the markets right now aren't.
You know arent to our liking yet but.
So that at some point you know we will when the time is right and the price is right. We'll certainly go back to it.
As to the $2 4 billion.
<unk>.
We have not given out the detail other than what I can tell you is that it is a it is bank debt. So it is floating.
And but we've but we've structured it in tranches.
Three different tranches.
The longest being over four years.
To give ourselves more.
Or more flexibility on that front and at rates that are honestly still today, a much more favorable than any than any high.
High yield that we would be.
That we would be able to get in the market.
Great. Thank you and just a quick follow up on wireless I know that you cant talk too much about strategy here, but are you any closer to any update you can provide on leadership.
New leadership for the freedom assets whenever the deal closes any progress that you can share. Thank you.
Oh, I guess, it's a little bit early to answer the question I think that we're through our due diligence.
We had the chance to.
To meet a lot of people and what we've been seeing.
There is certainly very.
Positive and enthusiastic.
In fact, we are again as I mentioned, you know, we look forward to get the transaction closed and making sure that as you just mentioned new leadership to be confirmed.
We were there a as of Tuesday.
And we met with senior management regarding the you know the next step that we would like to move forward with so we're aware of again very positive of our of the.
The upcoming <unk>.
And months.
Thank you I'll pass the line.
Yes.
Alright, our next question comes from Vince Valentini.
From TD Securities. Please go ahead, yes.
Yes, thanks, very much thanks for letting the call go longer this time I know theres a lot of interest in questions.
First maybe just to clarify you if.
Wireless EBITDA is up 22%.
Would mean your cable our wireline.
EBITDA was down about 5% year over year is that is that fair.
That's fair, but including equipment right. So services services is actually is actually up but yes, including the in wireline, including both service and equipment were down 3%.
Yeah.
Right Vince if you don't mind can you press star one one more time to get back into queue. Please.
All of us.
There we go just give me a moment here.
We love this but this is normal go ahead.
Go ahead Vince.
Alright.
Okay.
Okay.
Got lost.
I'm not a loss must be balanced sabotaging the line on us here.
It might be.
Yes, sorry, I didn't quite catch your.
EBITDA in wireline was only down 3% not five.
Three yes from my from the numbers I'm looking at yet.
Yes, 3%, including equipment, yes, yes.
Alright, and back to the Capex I know, we've talked a lot about it but I mean.
Your capex intensity was 12%.
Revenue that's way below any of your peers. So.
Just want to make sure that.
Theres no apples to oranges going on here is there have you done anything different in terms of.
Outsourcing any network function, so that something is being counted as a lease or.
Or an opex item instead of Capex.
And does that Capex number include anything Youre doing with these rural.
Projects that are.
With government subsidies is there anything youre hiding anywhere else or is that 12% and 457 million actually what you are spending.
No no no I can assure you we're not we're not hiding anything or not.
Being creative and accounting in any way shape or form I can assure you of that.
12% is really an apples to apples comparison to our or to what we know of our competitors.
Our results and that as I was.
As we were pointing out a little bit earlier, I think it really I mean it.
I know it sounds surprising to you guys, but you just have to think of the number of projects that people in telecom work on.
And then when you put in more disciplined in terms of of really going through a very disciplined business case.
It is actually quite amazing how many projects you can say no you know what this is not a good use of time and money and we're going to focus on something else.
Or or even on each on.
On each project you know do you really need to invest this much and each step of the project.
It's a little bit like losing weight, you know just by bringing down the.
Each should the.
The volume.
Eating a little bit less of everything you get there you know.
So it's I know, it's a lot, but it is something that.
Our two networks, both wireline and wireless.
We've invested significantly on over the past years, we were in a position don't forget contrary to bell and and Ah Yeah.
More specifically contrary to bell, where we didn't need to invest well we've invested in fiber I want to leave you with the impression that we don't invest in front, because we do invest in fiber significantly, but we didn't need to invest as much as bell needed to because we were starting from a very different point.
And we can and we can we can get there.
Comparable or very good performance at with lower investment so all of that in the mix disciplined and more.
Having an advantage on the on the.
On the on the fiber to the node as opposed to fiber to the home in many cases.
You know leads us to.
Significant decreases in.
Capex and as I mentioned earlier.
Our cost reduction our teams just the fact that we were that we're a lot more that we're requesting everything as to how much time, we spend on things how much money, we spend on things and how many projects, we're looking at and it just.
It just adds up okay.
Diluted.
It is.
Yeah I think that's also what we've been doing is that we.
<unk>.
We reduce or even you know clean up the amount of consultants that was working.
So obviously as you can imagine consultants are there to make them.
Yeah.
Important or.
Making sure that they will remain consultants, so that they are building projects and projects and projects.
Do we always need all of those projects at the end of the day, it's management decisions to have adjustments call, saying, yes or no.
<unk>.
Been seeing a lot of things that took place which to us was.
Was not necessary do you really need you know as an example, 15 Gardner subscription or a tree will make it but then you know if you're reducing because those expenses. Sometimes are also capital items are yes.
You are capitalizing that and more.
You're making them as an expense at the end of the day its cash and when you are reducing or you're just eliminating those kind of expenses at the end of the day you're generating.
Much more town. So we will continue to do work on this.
And.
Certainly again, we have the best.
<unk>.
Experience there out of the industry.
We will continue to remain the same I guess, our own work had been done.
And we look forward now for growth in our in the wireless sector in Canada.
Okay last one on this and then I'll pass the line. If you are going to take any more is.
A skeptic might say you are being extremely efficient and diligent at reducing your capex and your Quebec based business. Because you think there's a huge amount you'll have to spend outside of Quebec. In this $450 million will soon jump up to 800 or $900 million when you have to support freedom.
Well is there.
Is there any truth to that or do you think you can be just as efficient in your new new operations.
But there is no doubt obviously, our capex will increase and we know you know the status of <unk>.
The freedom network.
But there are certainly you know many things.
That will make our customer experience.
For freedom down their own much better than what it was before.
Automatic seamless handoff is certainly something that we look forward to establish.
We were there all you're also talking about roaming.
Adding the capacity to get one network to the other.
We have the MTN, though we have the spectrum that we pay for the obligation to bill. So everyday every weekend every month, our network will improve.
But you know we do not have shortage of time for doing it.
We're not rushing to do it in six months, we have in front of us.
A good period of time, which.
Being disciplined.
Give us the opportunity to remain efficient and we look forward to again established ourselves in that kind of environment, which is certainly up after mine.
For properly spending and good technology and proper places and appropriate systems.
Thanks.
Yeah.
Alright Meg.
Next question comes from David Mcfadden from core Mark Securities. Please go ahead.
Oh, great. Thank you I I got cut off the call. So hopefully this hasn't been asked already but.
When we look at the wireless net adds you know what.
Obviously down a fair bit this quarter, but yet.
Share of the gross adds in the market was still around 30%.
So should we.
Take it that maybe the market centers in the new paradigm, where the net adds were just going to be lower going forward or this quarter was just an aberration.
No I think I'd make here you know I think youre right, well and don't forget that.
Almost mathematically I would say we're naturally as you.
You know when you when you have a lot of I don't know when we used to be at 10% or 15% market share and we were cruising at a 30%.
The share of gross adds and then of course, you know, but now we're as we're as we're close to 25% market share on our in our four and a four.
A four player market, you know, obviously things things change a little bit.
Yeah.
And in terms of you know.
I think.
One thing you have to say, we will we are the only ones.
Giving out the net adds for Quebec, you know in our market and I think that that's important because we don't its hard to compare the net adds of our competitors in our market and I think it would be fair to say, what you said, but I think going forward them.
We certainly do not do.
And do not necessarily.
Expect a.
And that adds to be to be as high as <unk>.
As they work for us and in the others parts of or the earlier parts of our cycle of our development cycle that I just that it just makes a.
Natural sense that.
That we would.
I don't know if I'd use the term plateau, but the that are you know that our growth would.
Starts.
Starts diminishing a little bit I think that's I think that's normal and natural.
Okay. Okay.
And can you comment on the relative performance.
I'll try and brand in the fifth brand in the quarter.
Both.
We we don't give out that I'm not going to give you a specific numbers all I can say is that.
<unk> fit it in.
It had been slowed again don't forget that fifth start from scratch and it really launched in <unk>.
Any segment or segments of the market, where we were performing less well with videotron you know when we were used to refer to the the urban the younger crowd. The more tech savvy you know the more digital savvy crowd and there was that there was an opportunity there for us and also we were rich.
<unk> successful and fees grew very very well on that.
Now its normal after two or three years that.
We've you know that that growth is getting increasingly.
As you know a little bit slower and increasingly difficult I think that's just a that's just normal so I think it's again it.
Both are growing.
To be sure.
But says, which we used to say, maybe a few quarters ago or last year or a couple of years ago that fits with what the accounting for our.
Most of the growth or the net adds now it's you know.
It's more balanced I would say.
Okay.
And then I don't know if you can answer this question but.
Can you can you comment at all about what I said blanch from you to be able to prove this deal.
Like what assurance.
What's your question, David I'm not sure I understood.
So why do you why do you.
We've been asked by ISS to deliver.
Is that what youre asking.
Yeah, I mean, I think I think there I mean, when you read.
You know various articles it seems like.
Obviously, they want lower prices and you said that you know you were.
Tend to do that right.
What exactly do they want it and I think they won some weight them force whenever they want so I don't know if you could provide any commentary on that.
Armstrong.
Well you know I don't feel I don't feel authorized the stock.
For the minister, but in the meantime.
I think that you went public on it.
He is looking for exactly when you want them prices that will be lower if you consider.
And I guess that is certainly not really tough enough to demonstrate that.
Prices in Canada.
The eyes in the world.
And he thinks that is.
That is it.
His role.
To provide that.
An environment that will make situation different than what it used to be so.
Here we are in.
You certainly you know is in the driver's seat.
Cynthia.
<unk> got to approve that.
The transaction then yen because all of the previous steps have been.
Over and.
Positively answered.
So I guess I'd use without the amendments are for that.
David.
Yeah.
So we thank you all and thanks, David for your question and so we wish you a nice day, we'll talk to you.
Next quarterly meeting thank you very much.
Yes.
Everyone. This concludes the cubic core Inc. 's financial results for the 2022 fourth quarter.
Conference call.
The full year.
Thank you for your participation and have a nice day.