Yahoo Finance Quebecor revenue, earnings surge after Freedom Mobile takeover
Quebecor Inc. reported a 25.4 per cent increase in second quarter revenue and a surge in earnings on Aug. 10 as it released its first financial results since taking over Freedom Mobile.
The Montreal-based media and telecom company said the gains, which drove revenue to $1.40 billion for the three-month period that ended June 30, were due to the impact of Freedom and growth in mobile and internet services overall.
Adjusted earnings before interest, taxes, depreciation and amortization were $605.2 million, a 23.2 per cent increase from the previous quarter and in line with analyst expectations.
“National performance is better than Bell‘s and Telus‘ and allows us to start paying down debt as opposed to borrowing to service our dividend policy,” chief executive Pierre Karl Péladeau said during Thursday’s earnings call.
He said the company’s telecommunication segment had maintained “the best margin in the industry” in terms of EBIDTA.
“Our mobile network now reaches nearly 70 per cent of Canada’s population and we will be able to further expand our coverage by functioning as a mobile virtual network operator,” Péladeau said in a press release.
Prior to buying Freedom, the company only had 20 per cent wireless coverage. The acquisition has allowed Videotron Ltd., its telecommunications subsidiary, to enter the British Columbia and Alberta markets and strengthen its position in the Ontario market, it said.
Quebecor now has over 3.6 million subscriber connections in its mobile telephone service, an additional 124,700 or 7.5 per cent increase from the previous year. Its internet access customer count was up 38,100, a 2.4 per cent increase, to over 1.7 million customers.
“I would always say we are and I am very satisfied with what we’ve been able to achieve in this short period of time,” Péladeau said.
The company introduced new wireless plans including nationwide coverage supported by 5G network to its customers in late July.
Desjardins analyst Jerome Dubreuil said the wireless net additions of 49,100 excluding Freedom Mobile were ahead of the 41,100 consensus.
“Freedom contributed slightly more subscribers but less ARPU than we had anticipated, for total wireless service revenue ~1 per cent below our forecast,” Dubreuil wrote in a note to clients.
On July 24, the Canadian Radio-television and Telecommunications Commission sided with Quebecor over Rogers in a final offer arbitration proceeding related to the wholesale rate that Quebecor will pay to be a mobile virtual network operator on the Rogers wireless network.
The MVNO access was part of an agreement made when Quebecor bought Freedom from Shaw Communications, now owned by Rogers.
While not a material event for the “Big Three” national carriers — Rogers, Bell and Telus — TD analyst Vince Valentini said the decision is a slightly negative outcome for them.
The rates selected by the CRTC will allow Quebecor to offer more affordable and competitive plans, Péladeau said.
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