MONTREAL — Growth in Quebecor’s telecom business helped to offset a decline in its media segment, enabling the communications company to maintain relatively flat revenues in the second quarter of 2018.
Quebecor released its consolidated financial results on Thursday, reporting its Q2 2018 revenues of $1.04 billion were up $4.9 million, or 0.5%, compared to the second quarter of 2017. The company’s second-quarter 2018 adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) was $417.1 million, an increase of $12.8 million or 3.2% from the same quarter of 2017.
However, Quebecor’s net income attributable to shareholders was only $41.3 million, or $0.18 per basic share, in the second quarter of 2018, compared with $137.8 million ($0.57 per basic share) in the same period of 2017, an unfavourable variance of $96.5 million ($0.39 per basic share). This net income shortfall included the unfavourable impact of the $87.8-million gain on the sale of an AWS-1 spectrum licence to Rogers recorded in the second quarter of 2017, Quebecor said in a news release announcing its Q2 2018 financial results.
The company’s telecommunications segment grew its revenues to $847.2 million in the second quarter of 2018, up $20.6 million or 2.5% from the same quarter last year, and its adjusted EBITDA increased to $422.6 million, a $24.8-million or 6.2% increase over its Q2 2017 adjusted EBITDA.
Its Videotron subsidiary significantly increased its Q2 2018 revenues from mobile telephony by $14.9 million or 12.9%, compared to Q2 2017. In addition, Videotron saw increases in revenues from Internet access (up $14.9 million or 5.8%) and its Club illico over-the-top video service (up $1.8 million or 18.4%) in the second quarter of 2018.
Videotron also reported its total average billing per unit (ABPU) reached $49.68 in Q2 2018, up $1.56 or 3.2% compared to its total ABPU of $48.12 in the same period of 2017. The subsidiary’s mobile ABPU was $53.70 in the second quarter of 2018, compared with $53.32 in the same quarter of last year, a slight increase of $0.38 or 0.7%.
Subscriber connections to Videotron’s mobile telephony service increased by 31,900 or 3.0% and Club illico memberships increased by 8,500 or 2.2% in the second quarter of 2018.
On the downside, revenues in Quebecor’s media segment decreased to $186.5 million in the second quarter of 2018, down $13 million or 6.5% from the second quarter of 2017. The media segment’s negative adjusted EBITDA was $0.7 million, an unfavourable variance of $14.1 million from its Q2 2017 positive adjusted EBITDA of $13.4 million.
Quebecor’s sports and entertainment segment increased its revenues by $0.9 million or 2.5% to reach $36.9 million in the second quarter of 2018. Negative adjusted EBITDA for the sports and entertainment segment was $2 million in the second quarter of 2018, but this was actually a $1.6-million favourable variance from its negative adjusted EBITDA of $3.6 million in Q2 2017.
In a year-to-date comparison, revenues increased in the telecom segment by $39 million or 2.4% in the first six months of 2018, compared to the first half of 2017. Year-to-date media revenues decreased by $23.9 million or 6.2% from the first half of 2017, and the sports and entertainment segment’s revenues decreased by $0.2 million or 0.3% in the first six months of 2018, compared to the same period of 2017.
“Quebecor achieved a major milestone in its history in the second quarter of 2018 by completing the repurchase of all the shares of Quebecor Media held by CDP Capital, concluding the process begun in 2012,” noted Pierre Karl Péladeau, president and CEO of Quebecor, in the news release. “Quebecor therefore became the sole owner of Quebecor Media in the second quarter. With access to all the cash flows generated by the subsidiary, the corporation will now be better equipped to seize business opportunities as they arise, to achieve its objectives with respect to its dividend payment policy, and to take full control of its development projects.
“On the financial front, Quebecor’s revenues and adjusted EBITDA increased again in the second quarter of 2018, strongly stimulated by Videotron’s performance. Quebecor also posted an increase of $17.6 million or 19.9% in its adjusted income from continuing operating activities, reflecting the improvement in its operating profitability as expressed by adjusted EBITDA, combined with the favourable leverage effect on results produced by the repurchase of shares previously held by CDP Capital,” Péladeau added.
Manon Brouillette, president and CEO of Videotron, underscored the subsidiary’s growth in its mobile telephony and Internet access services.
“During the 12-month period ended June 30, 2018, the number of subscriber connections to the mobile telephony service increased by 125,900 or 13.2%. ‘Bring-your-own-device’ plans accounted for more than 35% of new mobile activations during the period, which helped reduce customer acquisition costs and boost the profitability of mobile services, despite slower ABPU growth resulting from those plans. Videotron has also added 54,300 subscribers (16.1%) to Club illico over the past 12 months,” Brouillette said.
“Regarding business development, Videotron continued investing in its Internet Protocol Television project, based on our partner Comcast Corporation’s XFINITY X1 platform. Ultimately, it will enable us to deliver the best available television experience to our customers. In the business services segment, Videotron recently launched its new Cloud Communications service, which combines the power of landlines and mobile through a unified offering. We are confident that this complementary service will enable us to expand our business customer base and retain existing customers,” Brouillette added.
To access Quebecor’s consolidated financial statements for the second quarter of 2018, click here.
