Skip to main content

Quebecor Inc. continues to attract a large share of Quebec’s wireless subscribers, but like the national carriers, its monthly prices are growing at a slower pace.

The Montreal-based company said on Thursday that it added 31,900 new wireless subscribers in the second quarter, meeting forecasts. Its telecom division, Videotron, which launched a mobile business less than a decade ago, drew 21 per cent of total new subscribers in its footprint, which is the province of Quebec and Ottawa, as it continues to lure an outsized amount of the market away from BCE Inc., Rogers Communications Inc. and Telus Corp.

Quebecor now has 1.1 million wireless subscribers compared with 10.6 million at Rogers, 9.3 million at BCE and nine million for Telus. That growth continues to offset declines in its smaller media business, which includes the broadcasters TVA Network and TVA sports and was hit by lower advertising revenue in the quarter after the Montreal Canadiens failed to make the National Hockey League playoffs this year.

Story continues below advertisement

However, Videotron’s average billing per user (ABPU) was $53.70 a month, up just 0.7 per cent year-over-year, compared with a 5.6-per-cent increase at this time last year. This is similar to results reported by the Big Three, which they have attributed to sustained price promotions over the past six months. Quebecor also cited customers who have their own devices, which leads to lower revenue than those who buy expensive smartphones through the company with up-front subsidies on the handset and more expensive service plans.

That’s not necessarily a bad thing, Videotron president Manon Brouillette said on a call with analysts, noting that bring-your-own-device (BYOD) customers represented 45 per cent of the company’s new clients in the quarter.

“BYOD for us is a long-term strategy … it brings a lower [ABPU] at first, but we make sure we manage the customer base properly,” she said, referencing efforts to persuade BYOD customers to move to more expensive devices and service plans.

“Quebecor’s lower-than-expected ABPU growth is in line with recent reporting from wireless incumbents, all of which are feeling pressure from increased promotions in the market,” Desjardins Securities analyst Maher Yaghi said in a report.

However, he added that Quebecor still has “potential upside in terms of working to increase its market share in Quebec” and also made a recent promotional push in the Ottawa area.

Quebecor reported overall revenue of $1.04-billion, up slightly from last year and roughly in line with expectations. That was boosted by revenues from its Videotron cable, wireless and internet business, which grew by 2.5 per cent to $847-million while sales at the media division fell by 6.5 per cent to $187-million.

It lost 19,500 television customers and 500 internet subscribers in the period, which includes the lead-up to July 1, when many people in Quebec move and disconnect home services.

Story continues below advertisement

Speaking on a conference call, chief executive Pierre Karl Péladeau said he was disappointed by the broadcasting results, but still committed to the “convergence” strategy of owning both telecom and media assets. He said the company will continue to lobby for regulatory changes to give it more flexibility to compete with foreign internet giants such as Facebook and Google, including changes to rules and fees regarding broadcasting services it must carry.

Profit across the company declined by more than 50 per cent to $41.3-million, or 18 cents a share, due mainly to a gain of $88-million on the sale of spectrum licences that was recorded in the second quarter last year. On an adjusted basis, the company earned 45 cents a share, beating average forecasts.

Adjusted EBITDA increased by 3.2 per cent to $417-million, in line with predictions, but again buoyed by strong performance from the telecom division, where adjusted EBITDA increased by 6.2 per cent to $423-million. The media division posted negative adjusted EBITDA of $700,000. (EBITDA means earnings before interest, taxes, depreciation and amortization.)

On June 22, Quebecor completed its $1.69-billion buyout of the remaining interest the Caisse de dépôt et placement du Québec held in the company’s main subsidiary, Quebecor Media Inc. That means Quebecor has full control over its cash flows, giving it more flexibility on matters such as its dividend policy, Mr. Péladeau said.

Mr. Péladeau, whose family controls the dual-share-class company, returned to Quebecor as CEO last year after a foray into provincial politics. He used personal funds to repay $135,000 in debts incurred during his campaign to become leader of the Parti Québécois in 2015. Last month, he pleaded guilty to violating Quebec electoral law, which stipulates that campaign debts must be paid with public contributions.

Earlier this week, he said he was reconsidering that plea amid concern it could affect Quebecor’s ability to maintain government contracts, because provincial law bars companies with executives convicted of certain offences from doing business with the province. Quebecor said in a statement on Tuesday that public contracts represent only a small portion of its revenue and have “no material impact on the corporation’s profitability.”

Story continues below advertisement

With a report from The Canadian Press

Report an error Editorial code of conduct
Tickers mentioned in this story
Unchecking box will stop auto data updates
Comments

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • All comments will be reviewed by one or more moderators before being posted to the site. This should only take a few moments.
  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed. Commenters who repeatedly violate community guidelines may be suspended, causing them to temporarily lose their ability to engage with comments.

Read our community guidelines here

Discussion loading ...

Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.
Cannabis pro newsletter