MONTREAL — Strong performance by Quebecor Inc.’s Videotron subsidiary helped to drive up the parent company’s overall revenues in the second quarter of 2015. However, Quebecor’s adjusted operating income fell slightly compared to the same quarter in 2014, partly due to investments made by Quebecor Media to develop the TVA Sports specialty channel.
Quebecor’s revenues for the second quarter of 2015 were $960.9 million, an increase of $67.9 million (7.6%) compared with the same period in 2014. The company’s adjusted operating income for the second quarter was $349.3 million, down $10.6 million (-2.9%) compared to the second quarter of 2014.
On the plus side, net income attributable to shareholders was $72.1 million ($0.59 per basic share) in the second quarter of 2015, compared with a net loss attributable to shareholders of $54.8 million ($0.45 per basic share) in the same period of 2014. This represents a favourable variance of $126.9 million ($1.04 per basic share), reflecting in part a $98.7 million improvement in the loss from discontinued operations (Quebecor Media’s English-language newspaper businesses and Sun News Network being among the company’s recently discontinued operations).
Looking at the numbers by segment, Quebecor’s Videotron telecom subsidiary achieved $741.5 million in revenues in the second quarter of 2015, an increase of $43.9 million (6.3%) compared to the same period in 2014, and its adjusted operating income was up $10.2 million (3.1%) compared to the same quarter last year. Breaking those numbers down further, Videotron posted a $29.5 million (44.2%) increase in revenues from mobile telephony, $14.1 million (6.6%) increase in revenues from Internet access services, and more than double revenues from the Club illico over-the-top video service ($3.2 million increase).
Videotron’s average monthly revenue per user (ARPU) was reportedly $133.71 in the second quarter of 2015, compared to $123.61 in the same period of 2014, a $10.10 (8.2%) increase led by a $5.69 (13.8%) increase in mobile telephony revenues. In terms of subscriber numbers, Videotron reported year-to-date increases of 150,600 subscriber connections to its mobile telephone service and 98,600 subscriptions to its OTT video service.
“Quebecor’s revenues grew by $67.9 million or 7.6% in the second quarter of 2015, mainly because of the telecommunications segment’s performance,” Pierre Dion, President and CEO of Quebecor, said in a press release. “Consumers continue to respond positively to the quality of the segment’s offerings. For example, subscriber connections to the mobile network jumped 40,800 (6.2%) in the second quarter, pushing the total over the 700,000 mark. Quebecor’s adjusted operating income was down 2.9% to $349.3 million, reflecting major investments required for the pursuit of our business plan, including the development of the TVA Sports specialty channel and our new venue management activities at the Videotron Centre in Québec City. Adjusted income from continuing operations was up $10.6 million or 19.0% in the second quarter of 2015.”
Regarding Quebecor’s recent application to the National Hockey League for a professional hockey franchise in Québec City, Dion added: “When it comes to development initiatives, Quebecor submitted an application to the NHL on July 20, 2015 to bring a professional hockey team to Québec City and move it into a home built specifically for this purpose, the Videotron Centre. Our ultimate objective is to make sports a major growth driver for Quebecor, a value-added content offering that draws our customers to live events which bring people together. All our actions over the past few years converge toward this goal, among them launching TVA Sports in 2011, making TVA Sports the NHL’s official French-language broadcaster until 2026, signing an agreement with Québec City to manage the Videotron Centre for the next 25 years and acquiring two Quebec Major Junior Hockey League teams.”
With respect to the company’s investments in mobile telephony, Quebecor recently spent $187 million to acquire a total of 18 2500MHz spectrum licences covering all of Québec and all of Canada’s major urban centres.
”With the AWS-3 licences that we acquired earlier this year and the 700MHz spectrum licences we acquired in 2014, the telecommunications segment is now well equipped to develop its Québec network in the coming years,” Dion is quoted as saying.
However, Dion was less clear about Quebecor’s plans for spectrum acquired outside the province of Québec. “As for the licences we have acquired outside Québec, at this point, we need to maximize the return on those investments, which were made at a very advantageous price and for which various options are available to us. We will hold to a prudent, disciplined approach in order to maximize returns while minimizing risk, particularly in light of Quebecor’s numerous projects currently in the development stage,” Dion said.
Turning to the media segment, Quebecor Media posted revenues of $239.7 million in the second quarter of 2015, an increase of $36.4 million (17.9%) when compared to $203.3 million in revenues in the same period of 2014. However, its adjusted operating income was only $11.3 million in Q2 2015, compared to $28.7 million in Q2 2014, representing a decrease of $17.4 million (60.6%).
“In the media segment, TVA Sports became the most-watched sports channel in Québec in its first season as the exclusive French-language broadcaster of the NHL playoffs,” Julie Tremblay, President and CEO of Quebecor Media Group, said in the press release. “The audience for the 12 playoff games in which the Montreal Canadiens were involved averaged 1,577,000 viewers and peaked at 2.5 million, for a 49.1% market share. Since the addition of NHL games to its schedule, TVA Sports has significantly increased its subscriber base to 2.1 million.
“In addition, on July 15, 2015, Quebecor Content announced a long-term multiplatform agreement with Sony Pictures Television Canada (“Sony Canada”) which will enable Videotron to offer a vast selection of movies and television series on its over-the-top video service and give TVA Group Inc.’s (“TVA Group”) television channels exclusive French-language broadcast rights to productions in Sony Canada’s catalogue.”
After Quebecor released its financial results for the second quarter of 2015 this morning, the company’s board of directors announced that Érik Péladeau is rejoining the board. Péladeau served as a director of the company from 1988 to 2010 and as vice-chairman of the board for much of that period. He is the eldest son of Pierre Péladeau, the founder of Quebecor.
To view Quebecor’s consolidated financial results for the second quarter of 2015, click here.
