Q3 2023 Quebecor Inc Earnings Call
The conference is now being recorded.
Yeah.
Good day, everyone and thank you for standing by and welcome to the cubic or Inc's financial results for the third quarter 2023 conference call.
I would like to introduce <unk> Chief Financial Officer of <unk>, Inc. Please go ahead.
Ladies and gentlemen, and welcome to this can they call conference call. My name is not I'm, the CFO and joining me to discuss our financial and operating results for this third quarter of 2023 is telling me that Doyle, our president and CEO.
As usual and you want 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 Dot, Quebec, or dot com and a recording will be available until February the seventh.
As usual I also want to inform you that certain statements made today 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 cooperation with the regulatory the Congress is no longer being recorded.
The countries that are probably being recorded.
Very good so we haven't been here, we're being recorded yep. Thanks, Doug.
[laughter] alright, so Cal up to you.
[laughter] Su and good morning, everyone.
And I would like to start by addressing last weekend sat announced.
Due to universal those structural changes in the media and television landscape.
As interim President of group, PDL announced and initiated a major restructuring of our broadcasting activities.
I would like to reiterate our tanks and support.
The more than 500 colleagues, who will depart the company.
In the upcoming months.
Personal investment will be fairly rewarded again, thank you.
On the regulatory front, we are happy that the CIBC has announced its long awaited decision on S. E T H wholesale rates.
<unk> will foster enhanced competition in Quebec, and Ontario.
It will be essential to ensure that these rates continued to be reflective of dow's true cost.
As we have pointed out several times in the past they arent maintenance expenses were Dallas sells its own serviced well below the supposed cost.
We often that the rate that commission will improve on a final basis well considered the fact that DAU continues to offer its one five gig access Quebec at a retail price of $65 Wow Bell as filed to the Ti T C L.
$108 rate towards the same access.
Before turning to our operational results I am happy to report today.
<unk> financial performance and our third quarter, where it can they call on a consolidated basis generated $482 million in cash flow from operations, an increase of 20% over the third quarter in 2022.
And EBITDA of $624 million up.
21% from last year.
You do at home with the addition of freedom improve its cash flow from operation by 19% to $454 million and its EBITDA by 20% to $590 million in the quarter, while maintaining the best margin in the industry.
Whereas our main competitor is boring to pay its dividend.
By continuing to increase its leverage ratio.
Our capacity to generate growing free cash flows enabled us to pay a decent dividend <unk>.
<unk> more than $250 million in debt in the quarter, and thus keeping lowering our debt EBITDA rich.
I will now review our operational results starting with our telecom segment.
Okay.
Upon closing the acquisition of Freedom mobile on April 30 of this year, we clearly announce our intention and quickly set about establishing a much more competitive mobile telephony environment across Canada.
While continuing to invest in our network to keep improving its quality and performance, we introduced seamless handoff roaming, which immediately improves user experience and further enhance network connectivity to nationwide coverage and affordable International mobile plans.
And in addition, we added 10% more domestic data to all existing new freedom subscribers and froze prices on all existing plans for current and future customers.
On July 27.
We did launch <unk> services.
Operating factor network access to more than 12 million Canadians in the greater Toronto, Calgary, Edmonton, and Vancouver areas as well as in other major cities across Ontario, BC and Alberta.
This <unk> rollout will progressively expand to other markets over the next months.
As is the case are to do with all five gene deployment in our.
The province of Quebec, which is proceeding as planned.
Capitalizing on the new MBA the whole regulatory framework introduced last year by the CRT feed as well as on its recent rates decisions. We just recently announced the launch of our <unk> service and the extension.
The service areas of our do it all fits and the freedom mobile brands throughout Canada.
This phase expansion will make our services available to millions of additional Canadian consumers, thereby giving them access to more choice better service and lower prices.
Speaking of lower prices.
We cannot be prouder of the most recent statistics, Canada monthly consumer price index or the CPI report demonstrating the clear impact of tobacco our strategy on the decline of wireless service prices in Canada.
Between September 22, and September 23, the CPI rose by 3.8%, but the wireless component of the index fell 12, 9%.
Since April 23, when you do it all acquired freedom mobile wireless prices have declined by almost 20%.
Clear.
We are delivering on our commitments again Adrian consumers.
Lower prices for these malls essential services.
Just be a breath there are fresh air for Canadian families or facing rising prices on all fronts.
It also shows that there is a.
Sizable market opportunity for us with a product of equivalent quality at a much lower price, which generate significant EBITDA and cash flow.
While on the topic of wireless.
We recorded 89000 wireless net adds in the third quarter.
3000 more than in the third quarter of last year and 40000 more than in Q2 this year.
This impressive performance is clearly the result of freedoms improving network.
Spend in connectivity and more competitive market positioning all of which were only implemented midway through the quarter and also due to the strong performance of our 100% digital Brad fifth and connect.
As expected, while it's hard to decrease slightly which is mainly attributable to the dilutive effect of the prepaid service churn rate on a postpaid customers increased 21% this quarter again due to freedom dilutive effect.
That said freedom turns rate is starting to come down with all the initiatives taking since the acquisition of <unk>.
Trend that should accelerate as we are committed and focused on improving quality service, our forums and low end pricing.
Wireless revenues doubled in the quarter and wireless EBITDA reached 232.5 known.
Turning to broadband.
Posted 5000 net adds this quarter, excluding third party resellers in a very competitive market, where our competitor keeps offering lower prices in Quebec and in the rest of the country.
Year over year.
<unk> reaches 80000 with <unk>, which includes the acquisition of 61000, and the media and freedom mobile customers in Q3 22 in Q2 23, respectively.
Despite this very competitive environment.
We continue to be very disciplined.
In our pricing strategies.
Which as translated in Internet ARPA, improving 38 cents over the last year, allowing us to overcome the diluted effect of <unk>.
And the lower client mix.
Through price optimization.
Improved brand positioning.
And church churn management.
And with continued mitigation of customer decline.
Traditional services.
We continued to generate growth in our wireline services revenues.
In a market direct drive by ongoing cost saving and cord cutting.
We managed to slow this trend down and TV for its sixth consecutive quarter by optimizing the positioning of our brands and the pricing of our Eagle and Elyse platforms, thereby improving art.
Most notably we manage to keep our television revenue stable.
Despite the strong market pressures.
Gild Hall reputation for the unmatched quality of its customer experience is well established and this year Lindsay reputation survey.
We do at home was again ranked the most respected telecommunications company in Quebec for the separate deep time since 2006.
Also.
Fifth place.
<unk> first or online experience in Canada telecommunication industry on Liftgate, Wow digital index for the fourth quarter I'm, sorry for the fourth year in a row.
And adding to the list.
And another alert Lindsay survey conducted between August and August 723.
Rebecca as rates do applaud the telecommunications company with the best customer service.
Twice as many respondents ranked game.
You do a tall first as its closest competitor.
Confirming the and then on the liable strategic advantage, we have built through the years.
These results clearly explained.
While our competitors have no choice, but to rely on sustainable pricing strategy and Quebec opens the pie on customer adds but without any significant revenue growth.
Turning to our media segment.
Our third quarter results.
We need to be impact.
By a very difficult advertising markets.
That shows no signs of improving anytime soon.
And a static regulatory environment that continues to put us at a disadvantage in our fine against the web Giants and the national broadcast.
<unk> decrease of $12 million in revenues and 2 million in EBITDA for the quarter as compared to last year, adding up to a cumulative EBITDA loss of 11 million. After nine months this year compared to a positive 12 million EBITDA.
Over the same nine months period last year.
As you know the audio visual that media landscapes throughout the western World.
It is undergoing profound and unprecedented changes as a result of the globalization.
<unk> TV viewing.
Driven by the proliferation of on demand digital broadcasting platforms.
And the tectonic shift in advertising spending to the web Giants.
These are no short term changes.
On the long term trend that is reshaping the broadcasting ecosystem.
For over 10 years, we have been telling government bodies and regulators.
The situation is dire and art.
Canada's private media companies must be able to operate.
And a modernized ecosystem.
That can adapt to a boarder less digital world.
More than ever.
These demands regulatory relief flexibly.
Flexibility and tax credit at more adequately equitably reflect.
The conditions facing broadcasters and producers in the TV industry.
The fact is that not only adds nothing changed about this situation is not worse than ever.
A lack of consideration for our industries.
Couple with the mounting challenges that confront us.
As force us to take on preceded unprecedented action.
The deficit TDA group is currently running is simply no longer sustainable.
We have a responsibility to.
Correct the situation.
<unk>.
Has historically been an important vehicle for Quebec culture.
Language and news.
We have a duty to preserve it and ensure it's the sustainability.
The necessary measure, we announced last week.
We'll change the way we do business.
To withstand the market pressures in face of competition.
We will refocus our activities reduce our operating costs.
We concentrate on this trend that set us apart and makes <unk> favorite TV network.
Our goal is to be able to continue offering viewers are original Quebec Compton.
Investing and to bring all Quebec or as reliable coverage of news and major sporting events.
Finally, our sports and Entertainment Division maintained its momentum with revenues and EBITDA of $60 million and 40 million respectively in the quarter.
Major shows, including Peter Gabriel Morgan, while in an odd behavior, where great successes at our Rocky champions.
Hi, Paul Thank you Beth and launched a new season, drawing record audiences.
I will now lead.
Review, our detailed financial results.
S GPS scout.
On a consolidated basis in the third quarter of 2023, Quebecois recorded revenues of $1 4 billion up 24% EBITDA of $624 million up 21% in cash flows from operations of $492 million up 20% from the same period last year.
Our telecom segment generated $454 million in cash flows from operations, a 19% increase compared to the same quarter last year EBIT.
EBITDA also increased 20% and $590 million and EBITDA margin stood at 48%.
Revenues reached $1 $2 billion.
Up 31% compared to the same quarter last year.
In addition to freedom mobile, which accounts for most of the revenue growth the videotron and fifth brands continued to deliver growth in both wireless and Internet revenue.
Service revenues rather.
On the Opex side, the increase of 46% in the quarter compared to last year is due to the consolidation of freedom mobile of course, as the cost containment initiatives and they and videotron and is continuing to pay off translating into are increasing and industry, leading EBITDA margins.
Telecom Capex spending excluding the acquisition of spectrum licenses was up $28 million as compared to the same quarter last year. This variance is due to the addition of freedom mobile and to higher investments in key initiatives, such LTE, such as LTE advanced and <unk> network extensions and geographic expansion on all markets.
Our media segment recording recorded revenues of 166, Million% to 2% decrease and EBITDA of $21 million, a 17% increase compared to the same period last years.
Attributable to the excellent performance of our digital and out of home activities.
Our sports and Entertainment segment revenues grew 4% to $60 million and EBITDA grew 18% to $14 million in the quarter.
<unk> reported a net income attributable to shareholders of $209 million in the quarter or <unk> 91 per share compared to the net income of $178 million or 76.
Per share reported in the same quarter last year.
Adjusted income from continuing operations, excluding unusual items, our gains or losses on valuation of financial instruments came in at $202 million or <unk> 88 per share compared to an adjusted income of $175 million or <unk> 75 per share in the same quarter last year.
For the nine months of the year for the first nine months of the year, rather than a quarters revenues were up 17% to $3 9 billion and EBITDA was up 15% to $1 7 billion EBITDA from our Telecom segment grew 16% to one 7 billion.
And improvement of $234 million over last year.
As of the end of the quarter.
Tobacco, our inks net debt to EBITDA ratio was 339 times down from 352 times.
Then at the end of the previous quarter and still one of the lowest of all art telecom competitors and peers.
Available liquidity of more than $1 8 billion at the end of the quarter and our growing free cash flows will allow us to continue to improve our very strong balance sheet.
During the first nine months of the year, we purchased and canceled 236000 class B shares for a total investment of $7 1 million.
We thank you for your attention and we can now open the lines for your questions.
Alright first question comes from Mark.