By Ahmad Hathout
The head of Quebecor took a shot at a recent industry trend involving the sale of wireless infrastructure to pay down debt, claiming the company has been able to “maintain the best balance sheet” so it can avoid those kinds of transactions.
Rogers and Telus have recently committed to selling minority stakes in their wireless infrastructure in part to pay down debt. Rogers has spent a boatload of money over the past couple of years acquiring assets to shore up its core businesses, while Telus has been focused on expanding east.
“I’m not sure that this is the right thing to do,” Pierre Karl Peladeau said about the infrastructure deals during the company’s second quarter earnings conference call Thursday. “We are able to maintain the best balance sheet of the Canadian telecom industry without having to resort to quick-fix deleveraging debt or infrastructure transactions, which surely will ultimately prove more costly.”
Peladeau said these transactions could impair future free cash flow with additional interest costs. Meanwhile, he said Quebecor has been able to generate enough cash to continue spending, pay dividends and reduce debt.
It was one matter that Quebecor executives used to size the company up against its beefier competitors.
Among Rogers, Bell, Telus and Quebecor, the latter is the only one that doesn’t publicize churn – the rate of customer defection. For consecutive quarters, executives at the Montreal-based company have boasted about best-in-class churn numbers for its postpaid wireless segment. This time around was no different.
“Don’t forget that we started not very long ago with the highest wireless churn in the industry by quite some margin,” Hugues Simard, Quebecor’s chief financial officer, said Thursday. Then the company improved its network performance, client experience and “agility of our marketing development,” among other things, Simard said.
Peladeau and Simard dodged analyst questions that tried to maybe catch them slipping on how low the churn is, with analysts trying to get them to signal on either side of the churn number of Telus, which has consistently had amongst the lowest churn figures in the industry. Telus had a blended monthly churn rate of 1.06 per cent in the comparable quarter.
“It’s come down a lot,” is what Simard was able to say. “We are quarter-after-quarter among the lowest. “We’re keeping our customers longer and our churn keeps getting better every quarter, which is very encouraging for us, and it proves that we’re doing all the right things.
The telecom added 72,000 new mobile wireless subscribers in the quarter, down from the 93,500 units it secured in the comparable period. The total base sat at roughly 4.26 million. Mobile average revenue per user (ARPU) was $34.35, down from $35.63 from the same period last year.
Mobile wireless revenue was $435.8 million, up from $410.3 million compared to the equivalent period. Mobile equipment sales revenue was $151 million, up from the $147.6 million it made in the comparable period.
Quebecor lost 3,200 internet subscribers in the quarter, compared to a gain of 1,400 last year, for a total base of roughly 1.725 million – up slightly from last year. Internet revenue was $311.2 million, down from the $315.7 million it made over that period.
It lost 19,300 television subscribers, more than the 13,800 it lost last year, for a total base of roughly 1.27 million – lower than the same period last year. Television revenue was also down to $187.5 million compared to the $195.9 million it made last year.
And the company lost 15,800 landline customers, more than the 14,900 it lost last year, for a total base of 577,400, which was down from last year. Landline revenue was down from the $62.8 million it made last year to $58.6 million in this quarter.
Total revenue was $1.38 billion, a decrease of 0.5 per cent compared to the equivalent period last year, which ended on June 30. Net income was $216.2 million, up from $206.6 million last year.
Revenue dipped in part because of a 5.4 per cent, or $10-million decrease in the media segment, offset by revenue increases in the sports and entertainment segment, which saw a 13.4 per cent – or $6.1 million – bump to $51.4 million.
Advertising revenue was $81.4 million, up from $76.3 million in the comparable period. Subscription revenue was $46.5 million, down from $56.4 million.
